Financial planner clients would benefit greatly by adding Chinese assets to their portfolio due to the country's structural growth story, according to Premium China Funds executive director Simon Wu.
"I challenge you to put, whether it be a conservative client or a growth client, 5 per cent of your client's portfolio into Chinese stocks and 5 per cent into Chinese property," Wu told an audience of advisers yesterday.
"You're still below index weight, you are still below growth impact rates. China last year contributed more to global growth than the United States for the first time ever.
"This year China will do multiples of the US contribution to world growth. China's market cap is now 12 per cent of global market cap."
Wu said the country is likely to overtake the US as the world's biggest economy sooner than 2025 due to long-term structural growth plans, which include stimulating the property sector, rural reform, rural housing and urbanisation.
In particular, key reforms will give Chinese rural farmers the right to sell, lease or mortgage their land.
This is significant, as previously farmers weren't allowed to own land and suddenly they are sitting on a pile of cash, Wu said.
Around 2.4 trillion renminbi in wealth would be created from this program, which could benefit 400 million people living in rural areas and spur long-term domestic consumption.
Chinese stocks have probably bottomed and there was a misconception among planners and clients that the asset class was too risky and volatile, Wu said.
The firm's Premium China Fund had a volatility measure of 20, while the S&P/ASX 200 was 27 and the S&P 500 was around 45 in February.
