Forbes reports that over the last three months, Morgan Stanley Capital International's China index has risen just 5% while the broader Morgan Stanley EAFE index of
international stocks has jumped 15%.
According to one fund manager, this is not reason to flee China.
Edmund Harriss has managed the $113 million Guinness Atkinson China & Hong Kong Fund since 1998. He has delivered total returns of 7.1% a year, while China
funds on average have returned 6.6%. Harriss prefers buying shares listed in Hong
Kong, rather than on the mainland exchanges because China-listed stocks
tend to sell for higher multiples due to a lack of liquidity.
Harriss' key observations:
Export manufacturing and local
consumption are still driving the Chinese economy
- Infrastructure spending has slowed and is now more directed toward water, power and transportation