As one of the largest and fastest growing economies in the world, China is able to offer a distinct source of potential investment growth. China is now the second largest economy in the world with GDP growth that has averaged 9.8% annually since 1978.1 China also maintains the second largest equity market2 and third largest bond market in the world.3
China continues its history of disciplined investing in its own advancement and growth. Despite rapid growth, China’s GDP-to-debt ratio remains among the lowest of the major markets.6 In addition, China’s equity market remains relatively undervalued, giving it room for future growth. Offering the rare combination of a powerful equity market, very strong credit quality and relatively high yields6, China creates a unique opportunity for global investors. Only recently has China welcomed foreign investors to share in its decades-long history of progress, offering a conservative and long-term avenue of growth.
When looking at stability through the long-term lens of growth, China is unrivaled and still growing. China overtook the United States as the world’s largest trading nation in 2013 and is likely, within a few years, to become the world’s economic leader.7 Chinese equities have a 9% correlation with the U.S. stock market5, offering global investors powerful avenues of diversification they previously have been unable to access.
1 Source: World Bank, December 2014
2 Source: Bloomberg, Hong Kong Poised to Top Japan as World’s No. 3 Stock Market, 10 April 2015
3 Source: Bank of International Settlements, June 2014
4 Source: Morgan Stanley, Global Economic, March 2014
5 Source: Wind, 31 December 2014
6 Source: Goldman Sachs, FAQ: China’s Bond Market, First Half 2015
7 Source: Forbes, How Can China Lead The World and Why Hong Kong is Key, 9 September 2013