Is China investable?

At our Danske Bank New York Summit 2021, Dr. Mohamed El-Erian provided us with his perspective on investing in China, which has similarities with Russia back in 2003-2004.

Through New York Summit -- transformed into a series of virtual sessions -- Danske Bank sheds light on current economic, investment and geopolitical topics. Dr. Mohamed El-Erian is President of Queens’ College, Cambridge University and former CEO and Co-Chief Investment Officer of PIMCO.


Watch a short recap

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Key takeaways from El-Erian

  • China has gone through a transition. Political risk impacted you if you invested in big tech in China, political risk impacted you if you invested in education and, most recently, political risk has impacted you if you are invested in property.
  • What we see in China has similarities with the Russian oil and gas company Yukos back in 2003-2004, when an oligarch decided to cross the line that divides business from politics. Yukos, which was partly owned by the oligarch, went from being a fully viable company to bankruptcy.
  • Western investors lost their money. The Russian political system was sending a message; do not cross that line. The political reaction was harsh – but once that message was understood, Russia went back to being investable.
  • In China, the same message has been sent, especially with Evergrande. This is a Yukos moment. If you believe that we will revert back to business now, there is massive value in the Chinese market right now. However, if you are uncertain whether or not that is the case, then you would err much more towards a higher risk premium or staying on the sideline for now.

About El-Erian

  • Mohamed A. El-Erian is the President of Queens’ College, the University of Cambridge. Since 2014, he has served as Chief Economic Advisor at Allianz, the corporate parent of PIMCO where he formerly served as chief executive and co-chief investment officer.
  • He is Chair of Gramercy Fund Management, a columnist for Bloomberg View, and a contributing editor at the Financial Times, He serves on two corporate boards and several advisory committees and non-profit boards.
  • Dr. El-Erian served as Chair of President Obama’s Global Development Council from December 2012 to January 2017. He has published widely on international economic and finance topics. His 2008 book, When Markets Collide, was a New York Times and Wall Street Journal bestseller, won the Financial Times/ Goldman Sachs Business Book of the Year, was named a book of the year by The Economist, and one of the best business books of all time by the Independent (UK).

New York Summit - what you need to know

  • A recurring annual event for Danske Bank’s corporate and institutional clients about investments, economy, politics and geopolitics.
  • Featuring some of the world’s most prominent thinkers, analysts and strategists.
  • Usually the event takes place in New York. Due to the global Covid-19 pandemic, as last year it was decided to transform this year’s event into a series of virtual sessions.

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