Business Maverick

Business Maverick

China assets are ‘ridiculously cheap,’ Alberta Fund CEO says

China assets are ‘ridiculously cheap,’ Alberta Fund CEO says
A Chinese flag in Pudong's Lujiazui Financial District in Shanghai, China, on Monday, 18 September 2023. (Photo: Raul Ariano/Bloomberg)

Assets with exposure to China look “ridiculously cheap” and Alberta’s investment manager plans to boost holdings in Asia to take advantage of it, its chief executive officer says.  

“If you can find opportunities to participate in the growth in China, without actually being in China, those are potential mispricing opportunities,” Alberta Investment Management Corp CEO Evan Siddall said on Tuesday during an event in Toronto. “My guess is that we’ll probably position ourselves in economies around those markets that are interesting.”

Aimco, which manages about C$1600billion ($118-billion) for the energy-rich Canadian province, has minimal direct investments in China and relationships with a number of external fund managers that invest there. 

The firm’s target for allocation to the Asia-Pacific region is “more”, Siddall said. “It’s actually no more complicated than ‘more’.” Aimco had only 3.8% of its money invested in Asian economies at the end of last year, with 77% in the US and Canada. 

To remedy that, Siddall opened a Singapore office this month after hiring Kevin Bong to run it as senior managing director and chief investment strategist. 

Canada’s large pension funds have pulled back on some activities in China. Earlier this year, British Columbia Investment Management Corp said it was halting direct investments in China due to geopolitical risks. Ontario Teachers’ Pension Plan cited regulatory changes in China, heightened risk, and deteriorating relations with the US and Canada for a decision to pause private-asset deals in the country.

Meanwhile, Chinese authorities are considering relaxing the rules that cap foreign ownership in domestic publicly traded firms, people familiar with the matter told Bloomberg last week, seeking to lure global funds back to its $9.4-trillion stock market. 

The policy tweaks, if implemented, would aim to boost overseas ownership in stocks listed in Shanghai, Shenzhen and Beijing. China caps total foreign ownership in locally listed firms at 30%, and subjects a single foreign shareholder to a 10% limit. 

What Bloomberg Economics says 

China is down shifting into a slower growth path sooner than we expected. The post-Covid rebound has run out of steam, reflecting a deepening property slump and fading confidence in Beijing’s management of the economy. Weak sentiment risks becoming entrenched. We now see GDP growth halving from an average of 8% per year in the decade before the Covid crisis to 4% in the decade after — and falling to 1% by 2050. 

The optimistic case for China remains grounded in the enormous size of the economy, the scope for gains as productivity catches up to the global frontier, and the development orientation of the government. These drivers remain in place, but with diminished force. — Eric Zhu 


Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted


This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.

Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

Become a Maverick Insider

This could have been a paywall

On another site this would have been a paywall. Maverick Insider keeps our content free for all.

Become an Insider
Daily Maverick Elections Toolbox

Download the Daily Maverick Elections Toolbox.

+ Your election day questions answered
+ What's different this election
+ Test yourself! Take the quiz