China, Hong Kong bubbles burst: Aberdeen
The bubbles in the Chinese and Hong Kong stock markets have now burst, but finding good investment opportunities amidst ongoing volatility remains a challenge, according to global fund manager Aberdeen Asset Management.
Aberdeen Asset Management Asia managing director Hugh Young said recent falls in asset prices have “transformed” the Chinese and Hong Kong stock markets into attractive investment opportunities, with share prices back at levels not seen for 12 months.
But Aberdeen expects both markets to face continuing volatility in the months ahead, driven by “deteriorating economic growth, worsening corporate earnings and the build up of inflationary pressures”.
“One of the many fallacies of the ‘rise of China’ is that its companies are immunised from normal economic forces,” Young said.
Young said that until recently, stock prices in these markets were a deterrent for the manager, which “stood aside from the excesses of last year”.
Today, the “restraining factor is still earnings, which look elevated given a still uncertain outlook, and one reason why volatility is likely to continue”.
According to Young, while China would “undoubtedly build on its position as a global powerhouse”, the challenge for investors is finding a way to gain exposure to this growth story.
Aberdeen said it prefers to invest in Chinese companies listed in Hong Kong, which have “better standards of accounting and transparency than on the mainland”. The manager also invests directly in Hong Kong listed companies.
Recommended for you
A former AMP adviser told the Federal Court how they are scared to turn off their phone after a fellow adviser attempted suicide as Justice McElwaine said the 92 objections “weighed heavily” on his mind.
Providence Wealth Advisory Group has appointed a new chief investment officer, a dedicated position after the role was previously held by its CEO.
While hiring new staff in a financial advice practice inevitably incurs expenses, Striver’s Alisdair Barr says the greater business cost can come from losing the skills of a valuable team member.
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.