China's uncertain property market outlook and potential for new policy is driving global investors to its sidelines, and they are investing in their distressed home markets, said US fund manager Russell Investments. "A lot of foreign investors feel they may not fully understand the market sufficiently to invest now. So I think a lot of them are taking a wait-and-see approach," Martin Lam, a director in charge of unquoted Asia Pacific property, said.
Washington-based Russell, which has $160 billion of assets under management, has cut its exposure to China over the past two years, benefiting from price hikes, along with investors such as Goldman Sachs and Morgan Stanley. Lam said Russell was concerned by the opaque future China's property market faced given the government's intensified efforts to curb speculation and cool housing inflation. It was less worried by the well-publicised property bubble.
"We don't think there is a (property) bubble in China," Lam said on Friday, disagreeing with some prominent economists, including Harvard University professor Kenneth Rogoff. Meantime, Lam said Russell was mulling whether to launch a second fund for Australian and Asian investors this year to invest in the US and European markets, where prices have fallen 30-45 percent from their pre-recession peaks.
"Based on the early success and the interest that Australian and other Asian clients have to get exposed to the value investment style available in the repriced market in America and Europe and the growth in Asia, we are strongly considering a second fund," Sydney-based Lam said.
That decision came amid rising concerns about a possible debt default in the United States, which has rattled the global financial markets. Meanwhile, a sovereign debt crisis is still plaguing the European Union. Russell's first Global Opportunistic Fund of Funds raised $240 million from Australian pension investors in 2007 and has been fully committed to 13 global managers.
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