Xi as China's long-haul leader: Beware the 'key-person' risk this creates

RIOTS, drought, social instability: Emerging markets are never easy. Now investors face a potentially bigger test - they must decide whether President Xi Jinping's determination to remain in power in China is a risk-on or risk-off moment for the whole asset class.

The Communist Party is set to repeal presidential term limits this month in a step that would allow the 64-year-old to rule beyond 2023, and perhaps for life.

One potential positive for investors is that the calculation of political risk in China becomes much simpler. Guanxi, or connections, has long played a key role. Companies associated with the political familie…