China's well-publicised defaults need action soon

China’s well-publicised defaults need action soon

clock • 4 min read

Dale Nicholls, manager of Fidelity China Special Situations fund, explores how his trust is dealing with the slowdown in China's growth and the rising number of defaults in financials.

Over the past three years, the MSCI China index has fallen about 10%, while the US’s S&P 500 index has risen more than 40%. Meanwhile, aggregate global markets have gone up by nearly one-third. During this period, earnings for companies in the MSCI China have increased by about 40%, outstripping earnings growth of its US peers. Given this, why has China performed so poorly?   Structural shift Much of China’s underperformance has come from a de-rating of the market, meaning investors have lower confidence in Chinese companies’ ability to grow earnings in the future. The focus has bee...

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