Invesco Canada blog

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Continuing signs that headwinds could be turning to tailwinds for Chinese equities


April 4, 2022
Subject

2021 was a difficult year for Chinese equities, but we believe many of the headwinds that challenged these stocks last year will turn into tailwinds in 2022, underlined by recent news from the Chinese government that said it would “actively release policies favorable to markets.”1 We continue to be overweight China in our portfolios as we have been able to find more high-quality investments at attractive valuations, in our view, than in other parts of the globe. We also think current valuations reflect a worst-case scenario. With the government indicating it will continue to take steps to support both the economy and equity markets and meet its announced 2022 growth targets, we think there will be much improved environment for Chinese stocks moving forward.

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Seeking value in emerging markets: China

Our team joined a webinar with over 800 participants, a significant turnout that was not unexpected given the current market environment.
 
As a follow-up to the call, we’ve received numerous questions from participants, with the vast majority pertaining to China. There was also some interest in India, Mexico and Brazil, which we will address in an upcoming blog post.
 
Growing investor interest in emerging markets has been driven by China successfully flattening the COVID-19 transmission curve and being one of the first countries to see signs of a recovery.
 
Conversely, many other countries are still struggling to control the virus, with their economies continuing to deteriorate. These developments make emerging markets potentially more intriguing to investors.

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