Investors dumping China load up on other emerging markets
HONG KONG: Global investors are increasingly choosing to bypass China's markets in favour of other emerging countries that are either gaining from the geopolitical and growth risks stalking the world's second-biggest economy or are far removed from them.
Some of the money is being diverted into markets directly benefiting from China's economic pain, such as Mexico, India, Vietnam and other locations that are replacing it across global manufacturing supply chains. Other investors are simply moving to markets with better growth prospects, such as Brazil.
The iShares MSCI Emerging Markets ex-China ETF, the world's largest emerging market ex-China ETF whose biggest holdings are firms in Taiwan, South Korea and India, attracted a record US$1 billion net inflow in the first half of 2023, the data showed. The favourable growth and valuations in Latin American markets, the tech-driven tailwinds for companies in South Korea and Taiwan, and the supply chain changes were offering investors better opportunities than China, he said.
Singapore sovereign wealth fund GIC's CIO Jeffrey Jaensubhakij said it has"incrementally" moved its capital to sectors and countries benefiting from shifts in the global supply chain and most of it"has been basically out of China into countries such as Mexico, India, Indonesia and Vietnam".
"The situation is even worse than last year when investors still had something to look forward to,” said a business development manager at a Hong Kong-based hedge fund, who is not authorised to talk to media.
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