Superfunds' Global Obsession: How Colonial First State's China Investment Could Harm Australia

Tempting Valuations: China’s Discounted Stocks

Colonial First State, one of Australia's major superfunds, has its eyes on China’s stock market, tempted by discounted securities. Chief Investment Officer Jonathan Armitage plans to boost the fund’s emerging markets exposure by around 2-3%.

While this might sound like a savvy move, it raises serious concerns about where these funds are choosing to invest.

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The Problem with Chasing Global Markets

Superfunds like Colonial First State seem increasingly obsessed with investing abroad, lured by the promise of high returns in international markets. However, this global chase often comes at the expense of supporting local investments.

When funds prioritise emerging markets over their home turf, they overlook the potential and stability that the Australian market offers.

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Diversification: A Double-Edged Sword

Diversification is touted as a key strategy for mitigating risk, but it’s becoming a double-edged sword. By spreading their investments across various global markets, superfunds are neglecting their responsibility to support and stabilise the local economy.

The push to increase international exposure, particularly in volatile markets like China, can lead to greater risk and instability, contrary to the intended goal of diversification.

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Conclusion

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