CHINA STOCK MARKET: As an investor in the dichotomy!

Increasingly, investments in China seem like a bigger risk again, which is probably mostly due to the fact that the opportunities and risks are no longer properly assessed... if this was ever possible at all. The Chinese authorities have again exerted too much influence on the economy and especially on individual companies in the recent past. Even more serious, however, is the eternal "skirmish" over Taiwan and the defiant, ever-increasing defensive behavior of the USA. The Americans actually still believe that they can stand up to the Chinese with sanctions or export bans. In terms of the share of global gross domestic product adjusted for purchasing power, the Chinese have long been ahead, specifically since 2014. China has long since ceased to be the "branch" of American or European companies, although many goods are still "copied." No, the Middle Kingdom has long been able to launch many products and, above all, innovations directly. Take artificial intelligence (AI), for example, where China is way ahead. However, the situation is allegedly different for high-quality microchips, where there is obviously still a greater dependence on the West. In the tech sector in particular, the U.S. wants to impose further export bans on China; a special "China" commission was even recently set up to keep a close eye on business ties with China. But China is not remaining idle either: Intense efforts to decouple the U.S. dollar, for example, are underway in the background. The trial of strength will continue in any case, also militarily, because China is massively arming its army arsenal! Unfortunately, the Asian country remains, despite long-standing tendencies of an opening in the direction of free market economy, an intransparent, unclear and above all by the communist party steered structure. But are these facts enough to refrain from investing in China? We still think that there are very exciting companies there and that the growth potential is enormous. According to forecasts, GDP alone is expected to continue to grow significantly by 2027, by up to 70%. The only major danger we see that would clearly advise against investing in China would be an attack on Taiwan with the goal of "reintegration." And allegedly it is an intention of the autocrat Xi Jinping to implement this project during his (last) term in office... with emphasis on "allegedly", because the source of this statement cannot be confirmed. But are the Chinese as crazy - as Russia or Putin, respectively, - to dig up the hatchet? We do not want to believe in this scenario! Rather, we consider the Chinese stock market to be undervalued after the valuation discounts due to the zero-COVID policy. In any case, we are holding on to our investments in CHINA MOBILE, XIAOMI and also PING AN HEALTHCARE. At the same time, we are currently reviewing the re-entry in CSPC Pharma (approx. HKD 8.70) and a new investment in ALIBABA (approx. EUR 93.60). Those who shy away from direct investments in China could also choose the so-called "proxy strategy": Here, one does not invest in Chinese companies, but in those that earn good money there. These include, for example, the luxury goods groups Richemont and LVMH or the sporting goods manufacturer Adidas. However, China is not a "must"!