Byline: Richard Dyson
CHINA remains one of the biggest topics of conversation for professional investors, but a growing number hold a negative view of its prospects.
Michael Godfrey co-manages the [pounds sterling]507 million M&G Global Emerging Markets fund, one of several portfolios that seek returns from the less established markets of Asia, Africa and South America.
Godfrey, whose approach is to identify well-managed, keenly priced, shareholder-focused businesses, and then own them for several years, dislikes China. 'Our long-held view is that China is not especially attractive and in areas is overvalued,' he says.
His fund owns no companies quoted in China itself and buys Chinese stocks - where he is in any case underweight - only via Hong Kong.
He identifies several problems in China. Local investors have driven stock prices too high, he says, and created volatility. Easy credit from Chinese banks has also pushed up property prices, boosting the chances of a crash. And he likes dividends, whereas Chinese firms (unlike Thai ones, for instance) place less emphasis on returning cash to investors. …