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Advisers see China recovery, India favoured

One in two financial advisers using Cofunds is anticipating a Chinese market recovery, but India looks more promising, according to research from the platform.

Just over half, or 51.3%, expect a correction and upturn in sentiment around the world’s second-largest economy, while a quarter are doubtful of any improvement in the foreseeable future. The remaining quarter is undecided about China’s prospects.

Britt Holland-Ellice, head of fund group relations at Cofunds, said: “As economic conditions appear to be improving, it is interesting to see a positive trend towards the emerging market sector, however with the continued uncertainty and slowdown in growth, advisers are right to be wary of investing in Chinese funds.”

As 42% of advisers questioned remained neutral on funds investing in emerging markets, 34% actually said they were optimistic, in spite of the region slowing to its lowest rate of growth in six years.

Nearly a fifth of advisers – 19% – said they were pessimistic on the region, expecting further declines. Cofunds research interviewed 300 advisers in August.

India shines

Meanwhile, 75% of advisers are “extremely positive” about India’s growth potential, expecting it to be one of the strongest equity markets over the next five to 10 years.

As Cofunds’ future parentage looks uncertain, with market rumours rife that a disposal by Legal & General is imminent, the platform said it expects asset flows to remain domestically biased.

Holland-Ellice added: “With increased demand for Japanese and European equities it will be interesting to keep a close eye on this sector over the next couple of months however, as adviser sentiment indicates, there is still continued uncertainty on overseas markets.  On that basis we conclude that new investment money is, for now, likely to stay closer to home.” 

Part of the Mark Allen Group.