Vaight underweights highly-valued China

High valuations and a lack of corporate governance means China is the worst placed emerging market to deliver a return on capital, according to M&G's Matthew Vaight.

The co-manager of the £244m Global Emerging Markets fund has a 14.1% weighting to China, compared to the benchmark’s 18.3%. “Many investors in China invest because of the country’s GDP growth, but when you look at history, there is no correlation between economic growth and stock market returns,” he says. “If you are buying into a market which has already priced in economic growth, you will never get a return. “China has poor corporate governance and looks quite expensive.” Vaight is particularly bearish on Chinese banks, which he says suffer from too much state interference. ...