A large money manager says it is “bullish” on China for the long haul.
Ignore the noise caused by short-term fears of trade wars, BlackRock officials said Wednesday, and be sure your clients have some exposure to the nation fated to rule the world’s markets. China’s growing power should be part of most portfolios, they said.
“The reality is today that China today is not just a robust emerging markets economy. It is the second largest economy and will be the largest economy in the world,” Mark Wiseman, global head of active equities for BlackRock, said at a press conference in Manhattan.
"China is a huge opportunity,” said Helen Zhu, head of China equities for BlackRock's Fundamental Equity division.
“China has had many problems in the past and will continue to face many challenges. But from a market’s perspective, that is precisely what makes it such a good long-term opportunity,” Zhu said.
She added that cyclical problems with the Chinese economy since 2016 are being corrected. “And things have gone tremendously well,” she said.
“China’s economy today is more resilient than sceptics expected,” Black Rock officials wrote in a report that projects that the nation will have a 2018 GDP growth rate of some 6.6 percent.
“Solid external demand helped first-quarter GDP growth beat expectations,” according to the report.
Wiseman said that despite fears over short-term problems, most long-term investors need some kind of China exposure. That’s because it is the lead economy in the fastest-growing region of the world. He added that 60 percent of global growth is coming from emerging market economies. But many advisors and investors are ignoring this, he warned.
“The reality is most investors in individual retirement accounts or in large institutional accounts are grossly underweighted to China,” according to Wiseman. “They tend to be grossly underweighted to emerging markets generally. The reality is what we think of as emerging markets today represents 60 percent of global GDP growth and by far the largest component of that is China.”
“If your portfolio isn’t appropriately attached to that growth, you are missing out,” he said.