Guest Column

China: "Invest accordingly"

  • Published 06 Aug 2009

Hugh Young, managing director of Aberdeen Asset Management Asia, talks on the risks of investing in the China market.

"The 19th century belonged to England, the 20th century belonged to the US and the 21st century belongs to China. Invest accordingly", said Warren Buffett. Had you started early and invested $1,000 (Rmb 6,835, €696, £592) in the MSCI China index in 1992 (its inception), by the end of last month you'd only have had $765 left. This is despite the real value of China's economic output growing by 356% and Asian equities generally by 191%. It is very easy to get enthralled by the spectacular growth of China's economy, but it has not necessarily produced good stock market returns. Why is this?

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