Investment letters

China’s late September stimulus measures, including cuts to its benchmark interest rate and funding to boost share buybacks, surprised many investors. Misperceptions and fears have convinced many that China is no longer an investable market. Beyond the macroeconomic challenges and headlines, we believe that China remains a great hunting ground for quality growth companies.

Since China’s reopening following the COVID-19 pandemic, the country has faced a sluggish economic recovery. Investor sentiment has soured due to the government’s tepid measures to boost capital markets, compounded by rising geopolitical tensions, demographic pressures and signs of a worsening real estate market. Concern has also grown over the active role played by Beijing in shaping economic policy and whether tit-for-tat trade measures will continue to define US-China relations in years to come. For many investors, this macro environment has proven too much to handle with some investors significantly underweighting – and, in some cases, fully exiting – their positions in China.

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