He cites the fall in retail spending in the fourth quarter of last year and the fact that China's application to the World Trade Organisation, hoped for this year, is proving more tricky than expected and may be put back. As a result Chan has decided to cut some of his fund's exposure to China, investing instead in Hong Kong companies that are likely to benefit from the drop in US interest rates, namely banks and property developers. His long-term forecast is rosier. Independent financial adviser Hargreaves Lansdown agrees. We are generally positive about China - just not at the moment.
China is viewed by most investment advisers and fund managers as an emerging market.
It is likely to be volatile, making it a high-risk for small investors. Holdings should form only a small proportion of your portfolio. Buying into the market through an investment trust or unit trust will reduce risk and fund managers Invesco and Aberdeen Asset Management, as well as HSBC, all have unit trusts offering access to China. Funds may take advantage of Chinese economic growth without risking direct investment. The fund is up 32.66 per cent over one year, 69.79 per cent over three and 158.3 per cent over five.