- Investment Director
Switzerland, Intermediary
ChangeThe views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
China’s equity market today has many notable qualities. Among the most striking is that it is the least expensive major equity market in the world (Figure 1). Not only is it inexpensive relative to other markets, but it is also at the bottom of its own long-term valuation range.
Figure 1
We know from extensive research over lengthy periods of time that valuations matter — they are reliably a key driver of future relative performance for both stocks and markets, with lower starting-point valuations having a strong and consistent relationship with higher future returns.
Not only is China attractively valued today, but investors’ expectations are at depressed levels. Investor sentiment, having been worn down by both geopolitical concerns and the weak performance of the Chinese domestic economy since the end of the zero-COVID policy, does not price in any significant likelihood of improvement in either overall economic growth or company-level fundamentals. However, to paraphrase Warren Buffet, “the time to be greedy is when others are fearful.”
Against market expectations, I believe it is within scope for China to surprise investors on the upside. The good news is that the primary ways in which this surprise could happen are either in the hands of domestic Chinese authorities or potential developments in the Chinese domestic economy. To summarize, we do not need a lessening of geopolitical tensions, or an improvement in international investor sentiment to unlock material return potential in Chinese equities. As we saw in July of this year, even the hint of a more constructive fiscal or monetary stance from the Chinese authorities is enough to bolster strong returns.
What could potentially catalyze a rebound in performance? There are three things I am keeping an eye on:
- The cessation of rolling regulatory crackdowns across industries by the central government;
- Meaningful concrete policy steps being taken to support household expenditure and domestic consumption; and
- Continued efforts to gradually loosen the policy framework for the property sector.
Any or all of these factors could materially support domestic sentiment within China on top of improving the country’s economic outlook.
Where do I see the greatest opportunity? Without question, in domestic consumption-related plays and companies that are not reliant on either imports from or exports to the West. While it is unlikely geopolitical tensions between the West and China will dissipate soon, there is, in my view, far more to the Chinese economy beyond its perceived reliance on being an export-driven manufacturer for developed economies. Although few investors seemingly recognize this, China is one of the least trades-driven economies in the world (Figure 2). Put another way, China is among the world’s most domestically oriented economies. For this reason, I see compelling opportunities today in high-quality companies catering to domestic demand in food, household goods, media and entertainment, and logistics industries.
Figure 2
While I would not describe myself as being strongly “bullish” on China today, I do think it’s fair to say that there is a reason for optimism, and that the concerns held by many international investors are based more on negative news headlines rather than underlying economic realities.
Expert
Related insights
Showing
of
Insights Posts
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Monthly Asset Allocation Outlook
Continue readingMultiple authors
event
5
min
Article
2025-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Time to capitalise on the evolving role of bonds?
Continue reading
event
2
min
Article
2025-09-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
No bulls in the China shop?
Continue readingMultiple authors
event
Article
2025-03-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Bizarro World: Could 2024 be the opposite of 2023?
Continue readingBy
event
Quick Take
2025-01-17
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Will a “Goldilocks” economy be just right for equity markets?
Continue reading
event
Article
2024-12-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Beyond China: what does the rest of the EM equity world have to offer?
Continue reading
event
Article
2025-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
URL References
Related Insights
Stay up to date with the latest market insights and our point of view.
highlight_off
You've been subscribed
Thank you for subscribing. You can manage your subscription using the links provided in any of our subscription emails.
Read next
Showing
of
Insights Posts
Macro and market
Multi-asset
Asset allocation
Wealth Program
Americas
Brazil
Canada
Mexico
USA
APAC
Asia
Australia
China
India
Japan
EMEA
Africa
Europe
France
Germany
Italy
Russia
United Kingdom
Emerging markets
Article
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Monthly Asset Allocation Outlook
Wondering how to reposition your portfolio amid election-related uncertainty? Explore the latest monthly snapshot of our Multi-Asset Team’s asset class views.
Multiple authors
event
5
min
Article
2025-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Active management
Fixed income
Macro and market
Wealth Program
Americas
Brazil
Canada
Mexico
USA
APAC
Asia
Australia
China
India
Japan
EMEA
Africa
Europe
France
Germany
Italy
Russia
United Kingdom
Emerging markets
Inflation
Interest rates
Macro
Monetary policy
Asset allocation
Article
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Time to capitalise on the evolving role of bonds?
We outline why we think the new economic era is elevating the role of bonds as a source of attractive and stable income, downside protection and portfolio diversification.
event
2
min
Article
2025-09-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
No bulls in the China shop?
John Mullins, Irmak Surenkok and Steven Ye assess the investment debate surrounding China's prolonged underperformance and outline three investment ideas for active investors to consider.
Multiple authors
event
Article
2025-03-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Economic cycle
Interest rates
Monetary policy
Credit
Americas
China
Europe
Fixed income program
Quick Take
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Bizarro World: Could 2024 be the opposite of 2023?
Fixed Income Portfolio Manager Brij Khurana details the dynamics that may upend investor expectations of a repeat of 2023 this year.
By
event
Quick Take
2025-01-17
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Outlook
Fundamental equity
EM equity
Large cap
Small cap
Equity
USA
APAC
China
United Kingdom
Emerging markets
Growth
Asset allocation
Volatility
Interest rates
Economic cycle
Article
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Will a “Goldilocks” economy be just right for equity markets?
We provide an outlook on the ongoing shift to new investment regime, and the market segments that we expect will most heavily influence global equity performance in the coming year.
event
Article
2024-12-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Asia
China
Asia tech
China Currents
Macro and market
Market commentary
Multi-asset
Distribution
Quick Take
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Full speed ahead: China’s race to implement AI
Our experts examine market implications of China's AI expedition.
event
Quick Take
2024-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Beyond China: what does the rest of the EM equity world have to offer?
For investors contemplating a separate allocation to EM ex-China equities, members of our iStrat Team share their research on the composition of the opportunity set, the growing divergence in the behavior of EM ex-China equities and Chinese equities, and the long-term market outlook.
event
Article
2025-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Outlook
Geopolitical
Information technology
Asian Opportunities
China Focus Equity
Asia Technology
Multi-asset
USA
China
Brand
Article
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
How geopolitics and the energy transition may reshape global trade
We explore the potential near- and longer-term market effects of deteriorating US/China relations, coupled with the shift toward a low-carbon economy.
event
Article
2024-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Look below the surface: A contrarian view on China equities
Equity expert, Ben Chen, dives into China's murky investment landscape.
By
event
Quick Take
2024-05-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
China fixed income: Dislocations create opportunities in this large and diverse market
Hear from our experts as they uncover new fixed income opportunities in China.
Multiple authors
event
Article
2024-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
China
Economic cycle
Real estate
China Focus Equity
Multi-asset
Macro
Market commentary
Outlook
Article
China Currents
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Getting Real: China looks beyond real estate for economic success
Our experts explore signs of an improving macro picture in China.
event
Article
2024-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
URL References
Related Insights
We seek to exceed the investment objectives and service expectations of our fund investors and their advisers worldwide
legal Information
follow us
Contact Us
© Copyright 2024 Wellington Management Europe GmbH. All rights reserved. WELLINGTON MANAGEMENT FUNDS ® is a registered service mark of Wellington Group Holdings LLP.
Wellington Management Switzerland GmbH. Registered at the commercial register of the canton of Zurich with number CH-020.4.050.857-7
For professional investors and intermediaries only. This content is not suitable for a retail audience.
In Switzerland, the Fund offering documents can be obtained from the local Representative and Paying Agent, BNP Paribas Securities Services, Selnaustrasse 16, 8002 Zurich, Switzerland. The Prospectuses are available in English, French and Swiss French.
we’d love your feedback!
Help us improve our website. For every short survey taken, we give 2 to the Wellington Management UK Foundation to support educational charities helping economically disadvantaged children in EMEA.
Full speed ahead: China’s race to implement AI
Continue readingBy
Yash Patodia
Terry Chen