Later this week, United States President Donald Trump and Chinese President Xi Jinping are set to meet at the G20 summit in Argentina. So, what should institutional investors be thinking about?
Canadian Investment Review spoke with Andrew Mattock, lead portfolio manager of the Matthews Asia China Strategy.
This is a good opportunity for Canadian plan sponsors to re-evaluate their exposure to China, Mattock says.
Most plans are starting from an underweight position in Chinese equities from a global point of view, he says. “It’s alright to talk about China all the time, but the bottom line is, from a global point of view nobody’s really got much money invested there.”
Part of the reason that investors are underweight in China is because market access has been an issue in the past, he says, but this has been improving.
With trade tensions rumbling, Mattock says people should re-evaluate how much they want to have in China in the long-term if there is a negotiated settlement and then work back from there.
Mattock also points to low valuations and new market opportunities as reasons to look to China.
With this weekend’s meeting, Mattock says he is optimistic, but doesn’t think all issues will be resolved.
“The issues are quite complex,” he says. “So to believe that everything can be negotiated and completed in such a short period of time is probably too much hope. But what we’re going for is some sort of calming down in terms of rhetoric and agreement to work forward.”
He highlights that both sides have a lot at stake.
“The world is so integrated today, so it’s very hard to see anything other than a negotiated solution to tell you the truth,” Mattock says.