A Singapore-based investment strategist recommends lifting Chinese assets to around 20% of portfolios during the course of the 2020’s, in order to adjust to major shake-ups in the global economy.
“In the new world order [investors] need to have more of their investment portfolios allocated into China,” said Paul Colwell, head of the advisory portfolio group for Asia at insurance brokerage Willis Towers Watson, to CNBC.
According to Colwell international investors currently allocate less than 5% of their investment portfolios to China, an amount which “[isn’t] enough to be fully prepared for the new world order.” Colwell advocates lifting this percentage to as high as 20% over the upcoming decade.
While worsening tensions between China and the US as well as its Western allies have heightened concerns about the potential for an all-out trade war and economic decoupling, Colwell considers this to be even more incentive for global investors to place bets on China, as it will improve the “resilience [and] robustness” of their portfolios.
“If you believe that the world is moving away from globalization, if you believe that the major economies in the world, particularly the U.S. and China will decouple from each other, then we believe there’s a strong case for allocation into China and more than you would have expected otherwise,” said Colwell.
“The China A-share market is relatively lowly co-related with developed markets. The Chinese economy operates at a fundamentally different frequency to that of the other major geographies, driven by different approach to monetary policy, economic policy.”