Sector selection essential as China moves toward consumer economy

IMA China/Greater China sector is an enigma as top performer over five years but second worst over past six months

The market has been divided in its attitude to China this year. On the one hand, it has been terrified continued high economic growth will generate further inflation and necessitate a severe hike in interest rates. On the other, it worries the Chinese government has done too much and monetary policy will create a ‘hard landing’ for the economy. This attitude has been reflected in markets. The Shanghai composite is down 1.5% since the start of the year and valuations are now at comparable levels to the depths of the credit crisis. Research by New York-based firm XTF also found investor...