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MarketScape · 12.11.23

The Case for Separating China from Emerging Market Index Investments

China’s stock market has not only underperformed most other emerging markets over the past decade, it is now distinctly different from them. Investors may want to consider China separately.
  • Portfolio Construction
  • Index Equity
  • Equity Insights
  • Market & Investment Trends
Key Points
What it is
We explain why emerging market index investors may want to separate China from emerging markets.
Why it matters
China’s heavy weight in emerging markets means it can sway investment results significantly.
Where it's going
China’s equity market has become distinctly different from other emerging markets, potentially justifying separate treatment by index investors.
Main Point

Index Investors Could Approach China Differently

We think China’s underperformance and market trends over the past decade has caused index investors to more closely scrutinize including China in their portfolios. It may make sense to separate China from other emerging markets, given China’s distinct differences.

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Michael Hunstad, Ph.D.

Deputy Chief Investment Officer & Chief Investment Officer of Global Equities

Michael Hunstad is deputy chief investment officer and chief investment officer of global equities for Northern Trust Asset Management. Michael is a member of the Asset Management Executive Group and has oversight of all equity portfolio management, research and trading activities including quantitative, index and tax-advantaged strategies. Additionally, he assists with the development of investment vision, strategy portfolio construction and risk management framework for the firm’s broad investment platform.

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