Investors urged not to misread China
Investors should not be put off by the willingness of the Chinese government to use policy levers for economic control as a sign of anti-competitive behaviour, according to Fidelity Worldwide Investment Asia Pacific investment director Catherine Yeung.
Following on from earlier comments that China still has the policy flexibility to manage and develop economic growth, Yeung warned investors not to transplant their Western rules of investment onto China's government and condemn their policy levers as anti-competitive.
"I know 80 per cent of MSCI companies are state owned enterprises. Just because in the West we apply certain rules like anti-competitive laws, we shouldn't put our Western rules into investing in China," Yeung said.
Investors are always suspicious of the Chinese government's behaviour, but investors need to approach their management and the way the country is run from a different angle, she said.
Even if the Government has a lot of control over companies, a lot of that risk was factored into the company share price, Yeung said.
Many of the policies the government acts on are outlined in their five-year plans and made public knowledge so investors and the public should know what they are planning, she said.
Yeung said investors should take the Government's plans into account when making decisions.
The Chinese would only do what benefitted them, and did not need to lower interest rates to propel growth, she added.
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