'Uninvestable' China argument rings hollow as long-term positives remain intact

CHINA shares have caught their breath after a spectacular collapse earlier in March that turned its main equity indexes into some of the world's worst-performing this year. This has caused some investors to question whether China is still investable.

The heavy sell-off was driven by a confluence of factors: a new wave of Omicron, further regulatory actions and sanction fears. This combination likely exacerbated negative sentiment in the short term, triggering some extreme price action - that is, the selling pressure on Chinese equities was not being driven by entirely "new" news, but rather by a combination of previous concerns and negative headlines in a market with fragile sentiment.

Investors with fresh memories of the 2021 sell-offs might be quick to draw parallels between that and what they observed in mid-March, but we view these differently.