Be patient with the Chinese market, says investment veteran

By Dai Tian (chinadaily.com.cn) Updated: 2016-01-21 13:32

An investor at a brokerage in Beijing. [Cao Boyuan/China Daily]

Be patient and invest in the long run is the advice a financial veteran offers to investors whose eyes are fixed on China's equity market.

Despite market volatility, the country's underlying economy is relatively sanguine, said Steve Potter, President of Northern Trust Asset Management.

Steve Potter, President of Northern Trust Asset Management.

"Chinese authorities have all the right tools to manage a soft landing," Potter told China Daily website, adding that investors overseas are watching the market closely.

With A-share's inclusion into the MSCI Emerging Market index, more capital with long-term commitment will come, said the veteran with 34 years experience in the financial services industry.

"We are confident that China's economy, even in slowdown, is on a solid ground," he said.

Founded in Chicago in 1889, Northern Trust manages over $875 billion assets. The company established its Beijing branch in 2010 and was granted the Qualified Foreign Institutional Investors (QFII) quota in 2012.

In an exclusive interview with China Daily website, Steve Potter offers his insights into the "chaos" in both A-share and yuan exchange market and the global appetite to Chinese investment.

Q: China's stock market has gone through a volatile year, which also had a ripple effect in the global market. How do you see the recent fluctuation and the fundamentals?

Potter: It's not surprising, as we expect more market volatility globally. We saw that last summer in China, especially after a great trend in the first half of the year and got much ahead of itself. It's just a bit shocking to see such a dramatic fall right in the first trading day of the year.

But we understand the nature of Asia market where the majority investors are individuals who move quicker than institutions, therefore we separate what's happening to A-share market itself from the underlying economy and think about longer term and fundamentals.

China has sent a clear message that its growth will decline, but in aggregate the economy is still very strong and fast-growing compared to the world. If you look deeper, there's overcapacity and manufacturing data as transportation and electricity utilization is relatively soft and declining. But what has taken place is a transition towards much stronger service economy and much of that being built by private enterprises and long-term sustainable business development.