Barings sees confidence on China among institutional investors

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Nearly half (45%) of institutional investors surveyed by Baring Asset Management believe corporate governance in China has improved over the past three years, with an equal number (45%) believing it has remained the same.

According to the research, institutional investor confidence towards China remains high, with half (50%) of those expecting to increase their exposure to China as corporate governance improves. Just under three-fifths (59%) said they were currently overweight or neutral in China versus 35% who are underweight.

However, institutional investors remain cautious on China GDP growth with respondents predicting an average of 5.4% annual GDP growth over the next few years. According to the International Monetary Fund, GDP for 2014 and 2015 in China is set to grow at around 7.5% and 7.3%2 respectively.

David Stevenson, head of Product and Business Development at Baring Asset Management, comments: “Our research underpins our view that China presents a strong investment case to institutional investors. It is clear to Barings that corporate governance has improved significantly and as the country continues to implement far-reaching reforms, we believe there will be more sustainable economic growth over the long run.

“The good news is that China is becoming more accessible to foreign investors, and overall, on both an historic basis and versus the rest of the world, China remains very attractive in our view.”

The research by Barings also found that nearly half (46%) of investors expect Asian emerging markets, including China, to outperform European equities over the next two-to-three years, while over half (54%) expect Asian countries, in general, to outperform global emerging markets.

According to respondents, Asia growth will be driven by a number of factors, with investors mostly focused on expanding middle classes (identified as the most attractive feature by 70% of respondents), lower levels of government and private debt (33%) and younger populations (30%).

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