In light of China’s Evergrande crisis, Pierre-Henri Cloarec, Portfolio Manager of the Nordea 1 - Emerging STARS Equity Fund shared the following commentary:

‘’The market has already priced in a bad scenario with Evergrande down >80% YTD. However, there also seems to be an apparent consensus that this is an idiosyncratic event with a limited risk of spill over, as the Chinese government seems to have many tools available in order to avoid the contagion risk, that may impact both growth and consumer sentiment among others.

Based on the assumption that the Chinese authorities are able to carry out a smooth debt restructuring and limit negative impact on the onshore property market, our current assessment is that broader negative effects in EM will be limited. In the unlikely case of a prolonged growth slowdown in the Chinese economy this may bear consequences for the commodity trade with other EMs, however we see the risk of this as limited for now.

We remain underweight Real Estate in both ESEF and ASEF with no direct exposure to Evergrande and no other direct exposure to Real Estate developers in China’’.