Chinese stocks have gone from red-hot to also-ran in the space of three months. Worries about the nation’s sputtering economy and frayed foreign relations continue to bother fund managers, who are also seeking to put the “investability” issue behind them.

In that period, at least nine global corporate bosses – from Singapore’s wealth fund GIC Private to Goldman Sachs and US private equity giant Blackstone – have landed in Beijing for meetings with top executives at China Investment Corp (CIC), the nation’s sovereign wealth fund.

CIC also hosted top bosses from Ares Management, HSBC, BNP Paribas, Allianz SE and JCDecaux as funds began abandoning the Chinese market for India and Japan. The wealth fund, which managed about US$1.4 trillion of the nation’s foreign-exchange reserves at the end of 2021, owns major stakes in top banks. It engages external fund managers to help invest in global markets.

CIC President Ju Weimin (left) and Chairman Peng Chun hosted top executives from global funds and banks over the past three months to exchange views on economy and markets. Photo: Handout

In those meetings, CIC Chairman Peng Chun and President Ju Weimin discussed local and global economic outlooks and capital-market landscapes with their visitors, all of them with a growing investment footprint in China and the region. They also shared information and pledged deeper cooperation on investment opportunities, CIC said.

“We regularly meet with representatives from major funds to exchange views,” the sovereign fund said in an email reply to the Post on Monday. “Specific details regarding the interactions are confidential. These interactions allow us to gain valuable insights and contribute to the continuous growth of our business.”

Such insight is invaluable for money managers who are trying to decipher the thinking behind China’s economic or political goals. At stake is US$2.3 trillion worth of Chinese stocks in MSCI China Index, a major benchmark tracked by global funds. The gauge has fallen 6 per cent this year, on top of a 22 per cent slump in 2022 and 2021.

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“Elevated tensions between the US and China are raising lots of questions,” economists Robin Brooks and Jonathan Fortun at Washington-based Institute of International Finance said in a report on June 22. Apart from de-globalisation concerns, “there is also focus on de-risking as foreign investors cut exposure”.

The Hang Seng Index has lost 7.4 per cent this quarter, while the CSI 300 Index of onshore stocks dropped 4.6 per cent, according to Bloomberg data, making them among the worst performing stock benchmarks globally.

Many institutional investors have begun to deem China “uninvestable” due to economic, geopolitical or moral concerns, making it a “thorny issue”, Yan Wang, a China strategist at Montreal-based Alpine Macro, said in a two-part report on the subject last month.

Antony Ressler (right) and his wife Jamie Gertz in a 2018 picture. The Ares co-founder is the principal owner of NBA team Atlanta Hawks. Photo: USA Today

Still, he added, “China is just too big and too deeply embedded in the global system to be ‘cancelled.’”

“Global business and political leaders, including some of America’s Western allies, flocked to China almost immediately after China’s zero-Covid restrictions were removed,” a testimony of the country’s indispensable role in global business.”

Those leaders included Antony Ressler, co-founder and executive chairman of Los Angeles-based private equity firm Ares Management. He met Ju on June 5, and they exchanged views on the private credit market outlook and global capital markets, as well as enhancing two-way cooperation, according to CIC.

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Ares, which manages US$360 billion of multi-strategy assets, bought part of Hong Kong-based SSG Capital Management in 2020 and took full control of its business in March this year. Ares Asia, the rebranded entity, bets on distressed assets and participated in the recent capital reorganisation of Luckin Coffee.

Peng exchanged views on markets and investments with Lim Chow Kiat, the CEO of Singapore sovereign fund GIC Private, on April 17. HSBC chairman Mark Tucker arrived in the same month, in the midst of a spat with China’s biggest insurer Ping An Insurance. Central Huijin, a CIC entity, owns a minority stake in Ping An’s domestic shares, according to the insurer’s annual report.

Stephen Schwarzman, founder and chairman of Blackstone Group, touched down in late March for a meeting with Peng and an exco member Bao Jianmin, according to CIC. They exchanged views on economic and market landscapes, as well as key investment areas, while pledging to step up communication and cooperation.

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The US private-equity giant made a US$3.05 billion takeover offer for Soho China in June 2021. It abandoned the deal three months later without waiting for the outcome of a review by China’s anti-monopoly agency, at a time when Beijing’s crackdown on private enterprises was still in full swing.

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Soho China, which owns a large collection of prime commercial properties in Beijing and Shanghai, last traded at HK$1.15 per share. Blackstone, which manages about US$1 trillion of assets, valued Soho China at HK$5 per share in its takeover offer.

A view of the Wangjing SOHO in Beijing in May 2023, a property owned by Soho China. Photo: Simon Song

Peng also entertained Jean-Charles Decaux, chairman of JCDecaux, the world’s biggest outdoor advertising company, on March 30. The Paris-based group also has a bigger stake at risk in China: it was part of a consortium that took full control of Clear Media Ltd and delisted it from the Hong Kong stock exchange in 2021.

Clear Media operates China’s biggest bus-shelter advertising business, and represents JCDecaux’s strategy to increase its presence in one of its key markets, China. Its consortium partners include Ant Group, an affiliate of Alibaba Group Holding. Alibaba is the owner of this newspaper.

Other executives who visited CIC included BNP Paribas chairman Jean Lemierre, Allianz CEO Oliver Bate and Goldman’s chairman David Solomon, according to CIC. Solomon exchanged views with Peng on the global investment environment and China’s economic potential, and agreed to “fuel win-win cooperation.”

David Solomon, chairman of Goldman Sachs, speaks during an event in Washington on June 8. Photo: AP
Mohamed Alardhi, executive chairman of Investcorp, also came calling. The Bahrain-based fund manages about US$50 billion in multi-asset strategies. Last October, it teamed up with Hong Kong-based family office Fung Capital to establish a US$500 million vehicle to invest in the Greater Bay Area.

Those visits underscore the importance of local knowledge on the Chinese economy while geopolitical risks simmer. Many Wall Street analysts are still bullish on China’s prospects, while money managers including Vanguard and the Ontario Teachers’ Pension Plan have retreated from some areas of the market.

“It is unlikely for China to become a global pariah like Russia, and that investing in China has become more – not less – important for global investors amid the US-China geopolitical tensions revival and financial decoupling,” Yan at Alpine Macro said. “It is unrealistic to completely ignore China. There is no proxy that can precisely mimic the performance of Chinese assets.”