China growth to average 7% in 2014, says InvestmentEurope poll

InvestmentEurope’s latest monthly poll of fund selectors across Europe has found that most expect Chinese economic growth to average 7% through next year.

While this is slightly down on expectations for 2013 growth in that country, it still places the economy on track to do far better than any European one.

Despite this, however, the allocation to China, now the second biggest economy globally, remains low among those polled: some 8 in 10 investors said they maintain an allocation of less than 10% to Chinese assets.

The full findings of the report are contained below, or can be viewed by clicking the link: [asset_library_tag 7384,November Poll]

January 31st will see the start of the year of the horse in China – but will the economy slow to a trot or continue to gallop away? In the wake of the Communist Party of China’s release of its “Decisions on Major Issues Concerning Comprehensively Deepening Reforms”, subscribers to InvestmentEurope were invited to saddle up and participate in a poll assessing China’s growth and the implication of this for fund selectors in Europe.


Q1. Where are you based?

q1-location-of-respondents

 

Q2. Approximately, what percentage of your allocation is to China?

Few respondents had allocations to China of more than 10%

q2-allocations-to-china

 

Q3. It appears the Chinese government’s 7.5% growth target for the country in 2013 will be met. What do you expect to be China’s growth in 2014?

Europe’s fund selectors expect China to grow at 7.0%, on average, in 2014, slightly below 2013’s target.

q3-china-growth-rate

 

Q4. How do you expect your allocations to China to change in 2014?

Almost half of respondents expect to increase allocations to China, with 6% expecting this increase to be significant.

q4-allocation-change-china-2014

 

Q5. Which do you think poses the greatest risk to the Chinese economy during the next 12 months?

The risk of a credit crisis weighs heaviest on fund selectors’ minds.

q5-risks-to-chinese-economy

 

Q6. Do you think China will be a more or less attractive proposition for investment in 2015 than in 2014?

q6-china-most-attractive-in-which-year

 

Q7. Will internationalisation of RMB make you more likely to invest in China?

q7

 

Q8. What are your thoughts on China, in general?

Bullish
High risk return ratio
Hopeful yet somewhat uncertain about the ambitious reforms recently announced
Hoping for structural reforms, short term pain for long term gain
I hope that substantial progress toward a more open democratic system will be made
Interesting and promising but with a severe lack of transparency.
Many challenges and many opportunities
N/A
Positive
Some big hurdles but policy focusing in logical areas.
Still cautious
Very positive in spite of hiccups.
positive
positive but not in short medium tern relative to other asset classes
Rather positive.
They are doing many things right for long term but corruption, environment and lack of political reforms are big problems.
The reforms decided at their 3rd Plenum early November will have a meaningful long-term impact and they will manage to implement them.
Structural reforms currently undertaken will have a far-reaching implication for the economy over the decade to come.
The setup has changed for the government from improving economic conditions to improving social conditions, including fighting corruption. This will weigh on growth short term but should be beneficial on a 5 to 10yr horizon.
reforms still needed, credit should be managed, tremendous long tern opportunity as the US in last century
China will stay socialist regime. Strong cultural and family values. Many things are done by the government in China. Hope private sector and government can do economic reform enough to solve social-economic problems. In the end private sector can do the most if this sector can bring up enough civility.
Reform plan is very comprehensive and should improve environment for companies long term. Attractive market valuation for a long term oriented manager. Short term upside surprise for the stock market likely because of cautious investor positioning (low weighting) and more positve view on reform agenda.
The reform plan unveiled in November goes in the right direction and could be a game changer as China should give maket forces a decisive role in resource allocation. The ability of Government to interfere with markets will be reduced and the State Owned Enterprises (SOE) sector delivering very low returns on investment will lose their privileges paving the way for better corporate governance and less corruption.
Difficult market, expert regional manager must make call how much to invest in the country because we ourselves do not have a clue
Black box economy Central planning never worked especially at this juncture Adjustment from capital intensive to consumer driven will be very painful
From the macro side, I am focusing on the execution of financial and land reform. The shift of economic growth towards domestic consumption and the revamp of demographics after the abandon of single child policy make me eager to increase exposure to Chinese equities. Credit issue and shadow banking concern might ease over the next year.
Interesting market, not always transparent and not easy to understand. Stock market does not always reflect economic activity and growth.

 

 

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