ETF 360: Andrew Mattock on China, Emerging Markets, and MCH

In the latest episode of “ETF 360,” VettaFi head of research Todd Rosenbluth spoke to Matthews Asia’s Andrew Mattock about the Matthews China Active ETF (MCH).

Emerging markets have bounced back to start 2023. According to Mattock, “the one big positive development, when it comes to emerging markets, that’s really China reopening coming out of what you would call dynamic zero COVID — which really did just cripple economic growth across the board in China.” Mattock sees the return to some degree of normalcy has the critical driver of the rebound in emerging markets. “I think it’s a huge positive, not just for China but for the rest of emerging markets,” he said, noting how much China’s economy fuels other emerging markets.

Mattock noted that the sunset of the pandemic is driving a host of trends that are pushing emerging economies toward recovery. International travel is picking up steam, and simple things like a broad return to restaurants and in-person dining has had a positive economic impacts. “Getting back to normal, I think, from a corporate earnings perspective feeds through to many, many parts of the Chinese economy.”

MCH Has Wide Breadth and Concentrated Depth

MCH invests in every part of China, regardless of where a company is listed. “The strategy of the fund is designed to go anywhere, in any part where Chinese stocks are listed and pick out the best opportunities across the board,” Mattock said, noting they look for growth at a reasonable price and attempt to keep the portfolio concentrated to generate alpha.

He added, “China is the manufacturing center of the world. What you get with that is you get long term buy-and-hold type opportunities, but you also get short term cyclical elements that are associated with being a manufacturing powerhouse.” This doesn’t mean MCH is limited to consumer staples, though. Mattock shared that it had industrials, financials, materials, and real estate. “The fund has a very diverse range of options available to it when it comes to the type of company we’ll buy.”

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