China Just Crossed A Landmark Threshold
Frank Holmes | Feb 09, 2015 02:41PM ET
Back in July 2013, the think tank Heritage Foundation predicted that China’s outbound investment:
...could very well exceed $80 billion [by the end of the year] and is on course to breach $100 billion by about 2016.
With all due respect to the Heritage Foundation, China just beat the forecast by a couple of years, exceeding the $100 billion mark at the end of 2014. For the first time, in fact, China invested more capital outside its own borders than it did inside. As legendary Major League Baseball player and coach Yogi Berra once quipped: “It’s tough to make predictions, especially about the future.”
Be that as it may, it’s now estimated that within the next decade, China will have invested a staggering $1.25 trillion into the global market.
It was once said that the sun never sets on the British Empire. Now the same might be said of China’s growing influence around the world.
“As China’s domestic infrastructure expansion matures and the yuan’s purchasing power rises, Chinese companies are seeking overseas opportunities so they’re not pigeonholed in any one marketplace,” says Xian Liang, one of our China region portfolio managers.
When you consider world economies using
Back in October, I pointed out that China has slashed hundreds of lines of red tape in an effort to jumpstart economic growth and encourage business startups. Even though its real GDP growth is slowing, the country has become much more efficient at fostering business activity.
Disclosure: Past performance does not guarantee future results.
Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. The Emerging Europe Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.
Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the China Region Fund and Emerging Europe Fund as a percentage of net assets as of 12/31/2014: AMC Entertainment, Inc.; China Rail Construction Corp. 2.00% China Region Fund; International Business Machines Corp. 0.00%; Smithfield Foods 0.00%; WH Group 0.00%.
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