Having turbocharged Asian and emerging market returns in 2020, Chinese stocks have attracted attention for all the wrong reasons in recent weeks. With this year’s regulatory crackdown hurting share prices, the country’s CSI 300 index was down by 2.5 per cent in sterling terms for 2021 as September drew to a close. That contrasts with a total return of nearly 35 per cent last year. This has weighed on Asian and emerging market indices, which have a substantial China allocation, and the funds that invest in the region.
With the exception of a few funds, including Stewart Investors Asia Pacific Leaders Sustainability (GB0030978729) and Fundsmith Emerging Equities Trust (FEET), both active and passive Asia and emerging market portfolios tend to have a hefty allocation to China. But as we noted a year ago, single-country funds can serve as a play on growth in the region with less reliance on the world’s second-biggest economy. With all eyes on China in 2021, how have they fared?