As the year draws to an end, there is no doubt that in global level, the biggest developments have taken place in China. Although at the beginning of 2021 after the approval of the new five-year plan which focused on the health, innovation and consumption sectors, the investment sentiment was positive, suddenly everything changed from the Government's decision to intervene in a regulative manner, causing a shock to the Chinese stock market.

ccording to experienced analysts on what is happening in China, these developments do not deviate from the plan that China has set for absolute domination in every sector of the global economy until 2035.

Efforts to open the Chinese market to international investors continue and this is confirmed by the fact that banking giants are beginning to establish offices in China. China will continue to need foreign capital in order to achieve its goals of maintaining high growth rates for the next 15 years.

Many investors have chosen to liquidate their investments in China, but there are also longer-term ones (mainly passive funds), which have rushed to invest selectively as they estimate that the pressures will gradually begin to decrease, especially since inflationary pressures in America remain particularly high. In general, investments in China have always been more risky, but investors received higher returns.

China, with its latest initiatives, wants to open up for many smaller and more innovative companies so that it run efficiently the changes brought up by the pandemic. However, attracting foreign investors, especially at a time when there is the greatest liquidity in history, leads to the conclusion that we have probably seen the maximum point of the interventions and from now on there could be a smoother stance of the Chinese government.

It is important to remind that China is not the only country that tries to ease its control on technology giants. Europe and the US have repeatedly tried to set limits by imposing heavy fines on technology companies, mainly for monopoly practices, market abuse and the management of their users' personal data. The difference is that in China, a much stricter practice was imposed.

Investors, as always, need to see the overall picture. The current period of increased volatility is not, in our view, a step backwards in China's long-term story. Direct exposure in China is an important investment opportunity for investors. In the XSpot Wealth’s investment portfolios Growth and Growth ESG, one can access this long-term investment story and even in tempting valuations and with great dispersion.

Large fluctuations also bring higher returns. The fact that China is at a discount is something not to doubt over. It is also undeniable that it has always kept pace with the rest of the world in terms of market returns. The following graph (returns), shows in the most eloquent way, this differentiation.