Event Recap: Appetite for China; Is China still investible?

On Wednesday 18 May, the Dutch Chamber organized this insightful hybrid event; your BLCC warmly supported it. Recent geo-political and economic developments have made a tremendous impact on the international business environment, including Mainland China. Examples of major changes are: the Common Prosperity Policy of Mainland China, Chinese government intervention in (digital & financial) markets, the ongoing US-China trade war, the ongoing covid-19 repercussions (most notably in China), the overheated US economy with fears for higher interest rates potentially leading to a recession, and the military conflict in Ukraine (with its huge political, energy and commodity repercussions).

During this webinar the following burning questions were answered: Is China still the land of business opportunities with high growth rates? Is it still an attractive place for foreign investments ? And what is the current role and position of the EU, in terms of trade and other policies? During this session, the organizers tried to approach these questions from different perspectives – both politically and financially.

The speakers were Walter van Hattum (Head of Trade and Economic, EU Office to Hong Kong and Macau) and Arnout van Rijn (Chief Investment Officer at Robeco Hong Kong). The moderator of this event was Michiel Mak, CEO at EMCS Hong Kong and Chair of the China Committee of the Dutch Chamber.

Arnout van Rijn, the first speaker started talking about sustainability and governance issues, including sanctions and exclusions. He continued by stating that the foreign currency flows into China have been positive, and that fund investors do not believe China is uninvestigable. 

In addition, he highlighted that overall, investors are getting cold feet though: the expensive currency and weaker growth are detrimental to that. The Chinese yuan has been supported by a large trade surplus and foreign investor flows. It is now seen as overvalued though. Foreign investors are infuriated by unfair treatment in the property bond crisis.

Investors now ask China for a discount, clearly stating that there is an uncertain outlook and that weak returns have brought valuations down. Investor sentiment is depressed, and portfolios are defensive. That’s a contrarian signal. 

The focus was then shifted to the EU perspective from Hong Kong. Walter van Hattum explained his personal experience in Hong Kong. He continued by highlighting how China has become the world’s largest exporter and investor between 2019 and 2021. He further explained that despite what’s going on worldwide, Hong Kong was still voted as one of the best places worldwide to be based in 2021. 

When speaking of investments China is doing relatively well in the European Union. Walter informed the attendees about the fact that the New EU Trade policy includes elements such as openness as a strategic choice, sustainability as a central pillar and to be assertive in their actions. The EU trade policy has certainly become more politically driven in that regard.

This informative webinar was ended with a very interesting Q&A where rather in-depth questions were answered by the speakers of the event.