Calling PMs/buyside Analysts - The whole China thing
wanting to get some opinions from people who also have to make capital allocation decisions. I'm becoming increasingly conflicted about China and its role in investment portfolios for clients. since my job is to allocate capital as best I can with regard to the risk the client's comfortable with, the potential returns of the area are attractive and therefore we have an allocation to emerging markets (of which china's the obvious 800lb gorilla).
at the same time, the talk of common prosperity, the lack of legal protections for equity holders, the presence of the communist party in every private enterprise gives me tremendous pause. combine that with the known atrocities being committed in NK which is essentially a puppet of beijing, and there's a big moral dilemma I'm feeling. finally, while I've rarely agreed with soros on anything in the past 10y, his pieces in WSJ on china were very compelling. pasted below if you've not read.
on the other hand, literally every single company in the USA has some ties to china, be it parts from suppliers that their vendors use, direct customer interest (movies, apparel, etc.), direct investment from china, and so on, it's a completely unavoidable thing, so part of me goes "well if I can't be 100% out, then what good does an imperfect moral stand do?" and let's not forget my job is to allocate capital, so I'm cognizant that I don't want my personal misgivings to negatively affect my investment decision making.
so, other PMs, how are you navigating the china minefield?