Tap emerging market growth, while avoiding specific China risks

WE BELIEVE China is no longer an attractive market for investment. China’s challenges run deep, stemming from the economic malaise and persistent long-term structural issues, such as the embrace of a top-down state-controlled economic growth model and the shifting geopolitics.

Investing in China now carries considerable risks, including the uncertainty of shifting geopolitics, regulatory changes, and economic instability. The sentiment surrounding Chinese tech giants, which are heavyweights in major indices, remains negative due to a slowing economy and subdued private consumption.

However, when we shift the focus away from China, we see more promising long-term growth prospects among its emerging market (EM) counterparts. South Korea, for example, is a standout. The country is well-positioned to harness its technological capabilities and innovation. Coupled with a highly educated and skilled workforce, it can potentially become the technology powerhouse in Asia. The country also stands to benefit from the imminent rebound of the semiconductor cycle, owing to the pivotal roles played by major corporations like Samsung and SK Hynix in the global semiconductor industry.