Greenberg bullish on China

Last week, China ended its third Plenum, a meeting in which government officials decide on policy for the country for the next decade. But investors that were hoping for a comprehensive plan for reform were left disappointed.

A note released by the government referred to “comprehensively deepening reform” and pledged to increase the role of the free market in China’s economy but failed to elaborate with proposals.

However, Mr Greenberg, who manages the Hermes Emerging Markets fund, said there was a “tremendous amount of potential” in China moving towards a more privatised economy.

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He highlighted rural land reform as one potential move that he said could unlock “10s of trillions of dollars” of wealth for China. The reform would be to allow farmers to buy and sell their land, whereas at the moment, the land is owned by the Communist party. In changing the law, Mr Greenberg said it could result in a huge boost to wealth in China.

He also highlighted reforms to the financial markets and China’s ecology as crucial to the country’s development.

Mr Greenberg said there were still a lot of headwinds in China, such as slowing productivity and rising debt, but he said he was still finding companies there that had potential for future growth and he said that gave him “hope” for the future of the emerging markets sector, which has underperformed developed markets for more than three years now.