Vidushi Nautiyal, Pune
Sharmin Mossavar-Rahmani, the Wealth Management CIO of Goldman Sachs said on Tuesday that investing in China may not be a good idea.
“All our clients are asking us that question — given how cheap China appears, people inevitably say, well, has it discounted the worst news”, said Mossavar-Rahmani in an interview with Bloomberg Television. “Our view is that one should not invest in China.”
She voiced concerns regarding China’s economic trajectory in the coming decade, adding that China will face challenges due to a decline in the country’s property market, infrastructure, and exports.
These reservations about investing in China are exacerbated by a lack of clarity surrounding the country’s policymaking and inaccurate economic data. She specifically highlighted ambiguity in China’s policy direction, especially regarding information security protocols and limitations on data removal from the country.
“It is not clear what the overall general direction of policy will be long term,” she said suggesting that policy uncertainties tend to restrain the equity market.
Amid growing global tensions and concerns about the status of domestic demand, the official CSI 300 Index fell to a 5-year low in February. Despite a recent rebound in the index following regulatory interventions, she cautioned that these measures might only provide short-term relief and that the real estate sector in China remains unstable.
She also expressed doubts about China’s official economic expansion estimates, saying, “Data is unclear — we really don’t have a good grasp of what growth was last year or what growth will be this year”. Although China officially announced a growth rate for 2023 that was higher than 5%, “most people think that is not the real growth number — it was actually a lot weaker. We don’t recommend clients move into China at this point.”
China announced in February that its yearly foreign direct investment has decreased in 2023 compared to the 1990s. The world’s second-biggest economy has been finding it difficult to recover after the pandemic. In response to mounting worries over rising unemployment, China announced on Tuesday that it would create 12 million jobs in addition to setting an official growth objective of about 5% this year.