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