Access China Through Europe

The Chinese stock market has been volatile and put investors off. But if you risk averse why not invest in developed market equities with exposure to the region instead?

Hermes 2 April, 2014 | 12:18PM
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This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Andrew Parry, CEO Hermes Sourcecap, explains how European companies can exploit China’s vibrant transformation.

If you read any of the recent press on China it would be difficult to make a case for the benefits of investing in the country. However, scratch below the surface of some of the myths about China’s current fragility and you will find a vibrant and growing small-to-mid capitalisation section of the market. It is a far more diverse and complex economy than the normal superficial generalisations would lead one to expect.

What does this have to do with European equities? European companies benefit from China's growth in a number of ways, such as the outsourcing of production – think H&M, Adidas (ADS) and Sports Direct (SPD). Expertise and technical know-how is another, perhaps less obvious benefit, which companies like Bureau Veritas (BVI), Volkswagen (VW) and Renault (RNO) benefit from directly and which also offers protection from competition from China.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
adidas AG307.85 EUR5.25Rating
Bureau Veritas SA26.97 EUR0.78Rating
Frasers Group PLC600.50 GBX1.35
Renault SA34.86 EUR-1.43Rating
Valeo SA26.70 EUR-1.26

About Author

Hermes  Hermes is a multi-asset fund manager offering global institutional and pension fund clients access to a broad range of specialist, high conviction investment teams.

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