Reform is coming in China, manager says

Gary Greenberg, lead portfolio manager of the Hermes Global Emerging Markets fund, says China’s Third Plenum - a committee meeting of the Communist Party’s top brass - has marked an acceleration in the pace of market reform in the country. The Third Plenum, which met last week, has put a larger weight on the role of the market.

The most significant part to come out of the meeting is that greater land rights have been raised to potentially sell land. He says if there is a urbanisation movement, farmers will have more capital to move to the cities. “This unlocking of capital will transform the agricultural population into an urban workforce,” he adds.

Mr Greenberg highlights one benefit of emerging market investing as the fact there are few countries where markets are highly correlated.

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He says if there was slower growth in the country and more commercial lending, we could see the market having higher earnings and equity could rise.

Mr Greenberg, whose fund is overweight China, sees the market as inexpensive. “Even if the economy slows, it still won’t slow that much,” he says. “It is a great environment for companies to run their business in. The next 12 to 18 months looks interesting for China.”