Wenchang Ma, China Equities Portfolio Manager at Ninety One

Institutional investors and asset allocators are no strangers to diversification. Yet portfolios remain heavily weighted toward developed markets and domestic resource sectors. As global growth drivers shift, this creates a structural gap. China’s economic transformation, and the broader evolution of emerging markets, may offer precisely the type of long-term, diversified exposure investors need.

Wenchang Ma, China Equities Portfolio Manager at Ninety One: “For much of the past decade, China was considered the growth engine of emerging markets, only to fall short of expectations in recent years. Investors endured lacklustre equity returns, policy crackdowns and persistent geopolitical headwinds. Between August 2021 and August 2024, the MSCI China Index fell by 35.5%, even as the MSCI ACWI gained 18.4%.”

Now, with policy shifts, renewed shareholder focus, and economic transformation underway, China may be at a turning point. September 2024’s rally lifted valuations from decade lows, with the MSCI China All Shares Index gaining c.23%. Crucially, that rebound has since proved more durable, with almost 75% of the subsequent 12 monthly index returns from October 2024-September 2025, proving positive. But does this mark the start of a more durable recovery?

Policy evolution: from reaction to strategy

China’s initial efforts to stabilise growth through monetary easing did little to inspire confidence. By late 2024, however, policy became more balanced. Fiscal support for local governments and targeted interventions in the property sector signalled a willingness to tackle underlying imbalances rather than apply temporary fixes.

“This shift aligns with the longer-term “dual circulation” strategy, which emphasises domestic consumption and innovation alongside global trade. Realising this vision requires greater investment in healthcare, education, and social security to bolster household confidence and reduce precautionary savings,” said Ma.

Beyond the U.S.–China lens

Investor focus often centres on Washington–Beijing relations. Yet China’s diversification of trade partners tells a different story. U.S. exports now account for just 14% of China’s total^[1], down by more than a quarter over the past decade^[2]. Growing investments in Southeast Asia and other emerging markets reinforce China’s role at the heart of global value chains.

For investors, China’s trajectory will be shaped less by U.S. politics and more by domestic reform and regional integration – factors best assessed through long-term fundamental analysis.

Shareholder value and sector opportunities

China’s corporate sector is undergoing rapid change. Record share buybacks and dividend growth signal a stronger focus on profitability and shareholder returns. Companies such as Alibaba and Tencent illustrate a shift toward more disciplined capital allocation, marking a clear departure from the “growth at all costs” era.

Long-term opportunities align with three global megatrends:

• Decarbonisation: China now leads globally in solar, batteries, and electric vehicles.
• Healthcare: driven by demographics and rising demand for insurance and infrastructure.
• Technology and consumer innovation: reshaping behaviour and creating new channels for growth.

These sectors offer diversified exposure beyond commodities and developed-market cyclicals, helping build resilience and diversification.

The emerging market context

“China’s transformation reflects a broader evolution across emerging markets. Once viewed as inherently volatile, EM equities have shown remarkable resilience. Ten years ago, EM equity volatility was 1.5–2 times that of developed markets; today, it has converged, underpinned by stronger fundamentals and improved policymaking”, said Ma. Reforms in governance, fiscal discipline, and monetary frameworks have narrowed the gap with developed markets. During recent global shocks, from the pandemic to geopolitical turbulence, EM volatility has been comparable to or even fallen below that of developed markets. This structural shift has elevated emerging markets into a higher-quality, more resilient asset class. For asset allocators still underweight, the case for reassessment is compelling.

A selective, long-term approach

China and emerging markets are not without risks. Geopolitical frictions, demographic challenges, and uneven policy execution remain. But these are increasingly balanced by structural reforms, stronger corporate governance, and growing sectoral depth.

For pension plans, endowments, and other long-horizon investors, the opportunity lies in selective allocation. Targeted exposure to areas such as innovation, decarbonisation, and healthcare offers growth drivers less accessible in developed markets. At the same time, adding EM exposure can help balance portfolios still heavily tilted toward domestic and developed-market assets.

Ma concluded: “With greater resilience and a broader opportunity set than in the past, China and its emerging market peers can now play a more meaningful role in building diversified, forward-looking portfolios.”

ENDS

[1] CCS (China Customs Statistics Information Centre), 2025

[2] IMF Direction of Trade Statistics (DOTS), 2025