Why now is the time to reconsider China


China is changing. Its economic growth is increasingly driven by innovations and investment in technology, data and science. Its capital markets are developing with a similar energy, on their way to becoming an integrated part of the global financial system.

Now is the time to get ahead of the opportunities as an investor.



Innovation, transformation and investment: key drivers of China’s growth


Advanced-manufacturing sectors such as ecommerce, biotechnology and electric vehicles have the potential to add more value to China's economy than traditional manufacturing, and investment flows reflect this. China's leadership role in these areas ensures that it will no longer be seen as a country that imitates others’ success.

What will the “China of the future” look like?

Some of China’s most significant transformational efforts include the success of domestic brands, a growing emphasis on sustainability and a commitment to leadership in advanced technologies. Supported by investments in R&D and infrastructure, these transformations are set to change the face of the Chinese economy over the coming decades.

  • Improvement in product quality is boosting dominance of local brands
  • In 2010, only 10% of smartphones sold in China were domestic brands; now it's close to 90%1
     

  • China plans to achieve carbon neutrality by 2060 (and peak CO2 before 2030)
  • China has been the largest investor in renewable energy over the last decade2

  • Healthcare: drug development is surging; China is the world's largest genetic databank3
  • Cryptocurrencies: watch out for the first truly digital currency in a major global economy

How can China help diversify your investments?

Icon: directions China’s markets have historically exhibited low correlations to other major markets – meaning they frequently move in different directions. This means investing in China could potentially bring diversification benefits.

Icon:chart Equities are available in a range of exchanges – from Shenzhen and Hong Kong listings to the Nasdaq-like STAR market.

Icon: coins Bonds can be accessed in onshore and offshore markets, and denominated in US or Chinese currencies, to help achieve a range of diversification objectives.

Our China expertise is deep and broad

In many ways a unique market, China is still unfamiliar to many investors. Partnering with someone who understands this dynamic region is critical. At Allianz Global Investors, we have a wealth of research capabilities across our investment platform, including proprietary insights from our Grassroots Research® team, with correspondents in China and across Asia.

China expertise infografic

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We’ve got you covered

Allianz Global Investors provides a wide range of China Investing solutions that may cover your investment needs - for now and the future.

Allianz China A-Shares
Allianz All China Equity
Allianz China Future Technologies

Discover our investable themes

Navigating Rates

Navigating Rates

A dynamic approach is required as investors adapt to shifting interest rates, inflation expectations and exchange rates. Volatility will likely persist: while we expect monetary policy to become gradually less restrictive than in recent times, higher rates will likely uncover weak points as industries feel the impact of elevated borrowing costs. Visibility of how markets will develop remains limited, even in the short term, and expectations could be upended. But we are confident this environment also creates opportunities.
Diversification is key – across public and private markets – and we have the ideas and expertise to navigate the complexity.

Learn more

Embracing Disruption

Embracing Disruption

We think it’s time to recast traditional definitions of “disruption”. Once a story for the tech sector, disruption is now all-encompassing as artificial intelligence and other transformative technologies are used widely.
While technology may be driving many of the changes, this new wave of disruption could shape many aspects of our daily lives. There are also geopolitical shifts to watch as China becomes preeminent in high-tech industries like electric cars and India positions itself as an emerging power.
The implications of this new age of disruption will be profound and exponential, and together we can embrace the opportunities.

Learn more

Achieving Sustainability

Achieving Sustainability

Sustainable investing is evolving rapidly. Increased flows rightly come with increased expectations of measurability and impact. The industry is on a journey: from a focus on ESG-led risk management to purposeful sustainability solutions and ultimately to impact investing strategies that contribute to measurable environmental or social benefits.
We believe this direction of travel towards real-world change will be the long-term trend of the decade. With a considered approach to achieving sustainable outcomes, we are alongside you at the different stages of your journey, whatever your ambitions.

Learn more

Interpreting China

Transforming Infrastructure

Infrastructure is key for the development and smooth running of economies and societies, but much of the infrastructure needed tomorrow does not exist today. Private capital can play a crucial role in funding essential projects as huge investments are needed, especially for the transition to greener energy.
Investors have many ways to enter this complex asset class and can pick their spot in the capital structure and the region or duration of the investment.
With our expertise and market access we are working with investors today to transform the infrastructure of tomorrow.


  • What will the "China of the future" look like?
    1. Source: Chinese Academy of Information and Communication Technology, data cited in Aroged, July 2021.
    2. Source: Global Trends in Renewable Energy Investment 2019, United Nations Environment Programme, September 2019.
    3. Source: Building of the World’s Largest DNA Database: The China Case, Ausma Bernot, December 2020.


    How can China help diversify your investments?
    Diversification does not guarantee a profit or protect against losses.


    Infograph: Allianz Global Investors’ China expertise
    Source: Allianz Global Investors. Assets under management data as at 30 April 2022.

    The Grassroots Research® division of Allianz Global Investors commissions investigative market research for asset-management professionals. Research data used to generate Grassroots Research® reports are received from independent, third-party contractors who supply research that, as far as permissible by applicable laws and regulations, may be paid for by commissions generated by trades executed on behalf of clients.

     

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    • Allianz Global Investors Fund (“AGIF”) as an umbrella fund under the UCITS regulations has within it different sub-funds investing in fixed income securities, equities, and derivative instruments, each with a different investment objective and/or risk profile.

    • All sub-funds (“Sub-Funds”) may invest in financial derivative instruments (“FDI”) which may expose to higher leverage, counterparty, liquidity, valuation, volatility, market and over the counter transaction risks. A Sub-Fund’s net derivative exposure may be up to 50% of its NAV. 

    • Some Sub-Funds as part of their investments may invest in any one or a combination of the instruments such as fixed income securities, emerging market securities, and/or mortgage-backed securities, asset-backed securities, property-backed securities (especially REITs) and/or structured products and/or FDI, exposing to various potential risks (including leverage, counterparty, liquidity, valuation, volatility, market, fluctuations in the value of and the rental income received in respect of the underlying property, and over the counter transaction risks). 

    • Some Sub-Funds may invest in single countries or industry sectors (in particular small/mid cap companies) which may reduce risk diversification. Some Sub-Funds are exposed to significant risks which include investment/general market, country and region, emerging market (such as Mainland China), creditworthiness/credit rating/downgrading, default, asset allocation, interest rate, volatility and liquidity, counterparty, sovereign debt, valuation, credit rating agency, company-specific, currency  (in particular RMB), RMB debt securities and Mainland China tax risks. 

    • Some Sub-Funds may invest in convertible bonds, high-yield, non-investment grade investments and unrated securities that may subject to higher risks (include volatility, loss of principal and interest, creditworthiness and downgrading, default, interest rate, general market and liquidity risks) and therefore may adversely impact the net asset value of the Sub-Funds. Convertibles will be exposed prepayment risk, equity movement and greater volatility than straight bond investments.

    • Some Sub-Funds may invest a significant portion of the assets in interest-bearing securities issued or guaranteed by a non-investment grade sovereign issuer (e.g. Philippines) and is subject to higher risks of liquidity, credit, concentration and default of the sovereign issuer as well as greater volatility and higher risk profile that may result in significant losses to the investors. 

    • Some Sub-Funds may invest in European countries. The economic and financial difficulties in Europe may get worse and adversely affect the Sub-Funds (such as increased volatility, liquidity and currency risks associated with investments in Europe).

    • Some Sub-Funds may invest in the China A-Shares market, China B-Shares market and/or debt securities directly  via the Stock Connect or the China Interbank Bond Market or Bond Connect and or other foreign access regimes and/or other permitted means and/or indirectly through all eligible instruments the qualified foreign institutional investor program regime and thus is subject to the associated risks (including quota limitations, change in rule and regulations, repatriation of the Fund’s monies, trade restrictions, clearing and settlement, China market volatility and uncertainty, China market volatility and uncertainty, potential clearing and/or settlement difficulties and, change in economic, social and political policy in the PRC and taxation Mainland China tax risks).  Investing in RMB share classes is also exposed to RMB currency risks and adverse impact on the share classes due to currency depreciation.

    • Some Sub-Funds may adopt the following strategies, Sustainable and Responsible Investment Strategy, SDG-Aligned Strategy, Sustainability Key Performance Indicator Strategy (Relative), Green Bond Strategy, Multi Asset Sustainable Strategy, Sustainability Key Performance Indicator Strategy (Absolute Threshold), Environment, Social and Governance (“ESG”) Score Strategy, and Sustainability Key Performance Indicator Strategy (Absolute). The Sub-Funds may be exposed to sustainable investment risks relating to the strategies (such as foregoing opportunities to buy certain securities when it might otherwise be advantageous to do so, selling securities when it might be disadvantageous to do so, and/or relying on information and data from third party ESG research data providers and internal analyses which may be subjective, incomplete, inaccurate or unavailable and/or reducing risk diversifications compared to broadly based funds) which may result in the Sub-Fund being more volatile and have adverse impact on the performance of the Sub-Fund and consequently adversely affect an investor’s investment in the Sub-Fund. Also, some Sub-Funds may be particularly focusing on the GHG efficiency of the investee companies rather than their financial performance which may have an adverse impact on the Fund’s performance.

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    Note: Dividend payments may, at the sole discretion of the Investment Manager, be made out of the Sub-Fund’s capital or effectively out of the Sub-Fund’s capital which represents a return or withdrawal of part of the amount investors originally invested and/or capital gains attributable to the original investment. This may result in an immediate decrease in the NAV per share and the capital of the Sub-Fund available for investment in the future and capital growth may be reduced, in particular for hedged share classes for which the distribution amount and NAV of any hedged share classes (HSC) may be adversely affected by differences in the interests rates of the reference currency of the HSC and the base currency of the respective Sub-Fund. Dividend payments are applicable for Class A/AM/AMg/AMi/AMgi/AQ Dis (Annually/Monthly/Quarterly distribution) and for reference only but not guaranteed.  Positive distribution yield does not imply positive return. For details, please refer to the Sub-Fund’s distribution policy disclosed in the offering documents.


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    • Some Sub-Funds are exposed to significant risks which include investment/general market, company-specific, emerging market, creditworthiness/credit rating/downgrading, default, volatility and liquidity, valuation, sovereign debt, thematic concentration, thematic-based investment strategy, counterparty, interest rate changes, country and region, asset allocation risks and currency (such as exchange controls, in particular RMB), and the adverse impact on RMB share classes due to currency depreciation.  

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    • Some Sub-Funds may invest in high-yield (non-investment grade and unrated) investments and/or convertible bonds which may subject to higher risks, such as volatility, creditworthiness, default, interest rate changes, general market and liquidity risks and therefore may  adversely impact the net asset value of the Fund. Convertibles may also expose to risks such as prepayment, equity movement, and greater volatility than straight bond investments.

    • All Sub-Funds may invest in financial derivative instruments (“FDI”) which may expose to higher leverage, counterparty, liquidity, valuation, volatility, market and over the counter transaction risks.  The use of derivatives may result in losses to the Sub-Funds which are greater than the amount originally invested. A Sub-Fund’s net derivative exposure may be up to 50% of its NAV.

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    Note: Dividend payments may, at the sole discretion of the Investment Manager, be made out of the Sub-Fund’s income and/or capital which in the latter case represents a return or withdrawal of part of the amount investors originally invested and/or capital gains attributable to the original investment. This may result in an immediate decrease in the NAV per distribution unit and the capital of the Sub-Fund available for investment in the future and capital growth may be reduced, in particular for hedged share classes for which the distribution amount and NAV of any hedged share classes (HSC) may be adversely affected by differences in the interests rates of the reference currency of the HSC and the base currency of the Sub-Fund. Dividend payments are applicable for Class A/AM/AMg/AMi/AMgi Dis (Annually/Monthly distribution) and for reference only but not guaranteed.  Positive distribution yield does not imply positive return. For details, please refer to the Sub-Fund’s distribution policy disclosed in the offering documents.

     

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