The Evolving Case for Standalone Allocation of Chinese Equities

Even though China is the world’s second largest economy based on both GDP and market capitalization, due to MSCI’s inclusion rules China is only the fourth largest country weight in the All Country World Index (ACWI). So, why add an allocation now? As MSCI adjusts its inclusion factor over the next several years, the higher weight of China in ACWI should provide a tailwind for Chinese equities. In addition, Chinese valuations appear fair relative to their own history and cheap relative to other global valuations. Finally, we will concede that investing in China poses risks, especially compared to developed markets, but think the potential opportunity calls for a higher portfolio weight than MSCI ACWI would imply.

Published Works

Over the past twenty years, Michael has written five books on behavioral finance and emotional investing to help clients make better investment decisions and reach their goals. His latest work below on the left is designed to help individuals recognize and better manage their behavioral investing biases in any stage of life or market environment.

Available on Amazon
Available on Amazon
Available on Amazon
Available on Amazon
Available on Amazon