Why billionaire investor Howard Marks is snapping up ‘uninvestable’ Chinese assets

As some on Wall Street steer away from investing in China, billionaire investor Howard Marks sees plenty of long-term value plays.

“Many people in the investment community describe China as uninvestible,” the Oaktree Capital Management co-founder told Bloomberg TV. “To me, that word is music to my ears.”

Though China has been losing favor among investors, Marks is increasing exposure to the country’s beaten-down assets.

“Clearly, China is on the pile of things that people feel ill about, and it’s on that pile that you find the bargains,” he said. “That doesn’t mean that you should buy everything on the pile, but that’s where you look for the castoffs and the bargains.”

Marks suggested that China has “great potential to come into its own,” as the country seeks out a sustainable growth model that isn’t too dependent on stimulus.

“They’re trying to calibrate the right amount of stimulus to produce good growth, but not an excessive reliance on stimulus, and stimulus sometimes leads to unwise behavior,” he said.

In the eyes of many foreign investors, the world’s second-largest economy has stumbled dangerously in the post-pandemic period. While Beijing tries to revive an inactive consumer base, it is simultaneously looking to fix the country’s massive and highly indebted property market.

Recent stimulus announcements have sparked hope of a rebound, but the pledged actions did not satisfy investors for long. Though Beijing has expanded financial and monetary support, traders have hoped to see more stimulus directed at China’s domestic spenders.

But as Marks sees it, it’s not easy to calibrate a healthy amount of stimulus, though he sees Beijing dedicated to the task. He says China will see growth that still exceeds other countries, including the US. S&P Global Ratings expects the US economy to grow by 2.7% this year.

As for the US investing landscape, Marks notes that while stocks have been performing well, they are “high priced,” which makes the bargains available in China more appealing.