As China’s markets suffer, what alternatives do investors have?

Some foreign investors in China are most worried by the country’s souring relations with the West. Others fret about the unprecedented slump in its property market. Many are simply tired of losing money. Rumours that officials are considering steps to stabilise the country’s markets may have brought respite in recent days, but over the past year the CSI 300 index of Chinese shares has fallen by 22% and Hong Kong’s Hang Seng index by 30%.

As such, optimism about China Inc is an increasingly distant memory. Just five years ago, though, investors clamoured for exposure to the country’s growth miracle and sought diversification from rich-world markets, which often move in sync. Providers of the world’s big stock indices were making adjustments accordingly. Between 2018 and 2020 Chinese stocks listed onshore, known as A-shares, were added to the benchmark emerging-markets index.