US trade wars continue to dominate headlines

But on the positive side, private sector manufacturing is increasing, driven by the party’s determination to ensure sufficient funding for small and micro enterprises, which will continue to be a key focus for growth moving forward.

The trade wars have driven weakness in Chinese equities, particularly in sectors most exposed to US trade, but to put this in context, less than 5 per cent of the MSCI China Index revenue share comes from the US, and we believe there is a case to be more constructive on China.

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The return on equity growth rate in China is one of the best in Asia and is supported by structural tailwinds: better margins driven by factors such as improving domestic consumption, cost reduction trends, and consolidation in state owned enterprises. 

In addition, after a nearly 25 per cent drop in Chinese equities since January, the price to earnings ratio is now below its long-term average, and we believe this represents an attractive entry point for investors looking to get back into the market.

George Efstathopoulos is a portfolio manager at Fidelity International