The latest volatility in China — with regulators in Beijing attempting to rein in several sectors of the Chinese economy — is only the latest blow for international investors.
“The invest-in-China mantra has always been based on the idea that China was going to be the next big global power, so that’s where I need to be,” said Matt Maley, chief market strategist at Miller Tabak. “That’s being rethought. How can you discount risk when it’s not clear what China will do?”
Even before this latest issue with China, international investing has been a difficult game. Now, international fund managers say it’s getting even harder.
“A lot of investors have given up on international investing,” said Brendan Ahern, who runs KraneShares ETFs, which focuses on investing in China. “If you are an international advisor, and you have had 10 years of underperformance, you are constantly defending why you are invested overseas.”
Indeed, international fund managers have been on the defensive for some time. China has been underperforming the U.S. for more than a decade, but because China is such a heavy weighting in emerging markets funds, those emerging markets have also underperformed.
