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Prevailing Winds

China 2023 Outlook

Prevailing Winds is a China-focused blog written by Nicholas Borst, Director of China Research at Seafarer. The blog tracks the economic and financial developments shaping the world’s largest emerging market.

The past year was one of tremendous volatility for Chinese assets. Global conflict and domestic policy upheaval in 2022 have unsettled investor expectations about China’s economic future. A more politicized environment in China and increasing tensions with the rest of the world are significant headwinds for many companies. Yet, despite these challenges, there are reasons to be optimistic that China will continue to provide attractive investment opportunities.

I address this topic in a recent Letter to Shareholders:

While these two developments – China’s changing priorities under Xi and the deterioration of the U.S.-China relationship – are hugely significant, they are not new. As the market has finally caught up to the new reality on the ground, it has been accompanied by volatile moves in the prices of Chinese securities. Market participants are now struggling to value Chinese assets in this new and more difficult investing environment.

in a video titled China 2023 Outlook:

China's best companies are not going to be limited by China's domestic market. That's one exciting thing that we're looking for as we evaluate investment opportunities in China.

and in an interview with CFA Society San Francisco:

There's been a real shift for a lot of Chinese companies to start focusing on shareholder return. More Chinese companies are paying dividends. Dividend payout ratios have increased, and some Chinese companies are now doing pretty substantial buybacks.

To learn more, follow the links below.

Nicholas Borst,
The views and information discussed in this commentary are as of the date of publication, are subject to change, and may not reflect Seafarer’s current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of the portfolios or any securities or any sectors mentioned herein. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Seafarer does not accept any liability for losses either direct or consequential caused by the use of this information.