China may face challenges in attracting investors for the upcoming year, as concerns about the country’s ability to generate stock market returns persist. Mike Akins, the founding partner of ETF Action, points to the dilemma of the old saying, “Fool me once, shame on you. Fool me twice, shame on me.”
Akins emphasizes the disconnect between China’s economic expansion and the lackluster performance of its stock market, marked by volatility and inconsistent trends.
Akins notes that ETF Action is observing significant inflows into emerging market ex-China products, indicating a preference among investors for alternatives outside of China.
He raises the question of whether the Chinese market is truly investible in terms of total return or if it primarily represents a growth story in the economy without translating into returns in the stock market.
David Mann, the global head of product and capital markets at Franklin Templeton Investments, identifies another factor contributing to investor hesitancy—the geopolitical landscape with China.
Mann points out that the geopolitical factor is at the forefront of investors’ minds, especially considering China’s market decline last year and its continued downturn this year. The Hang Seng Index, reflecting the performance of Hong Kong’s stock market, has experienced a decline of more than 6% in the current year and nearly 30% over the past 52 weeks.