SVM Asset Management, the UK-based investment house, says it has a “strong structural preference” for Asian equities and is becoming more optimistic about China in particular, according to a note from the business.

Chinese equities have had, by recent standards, a lukewarm past 12 months. The Shanghai composite index managed to rise only 3.2 per cent in 2012, lagging far behind the 13 per cent gain of the US S&P 500 index measure of blue-chip stocks, but in December, the Shanghai benchmark had a strong month, up by 12 per cent. Some wealth managers, such as Crossbridge Capital, for example, forecast a rally in Shanghai’s market of up to 20 per cent in 2013.

SVM portfolio manager Neil Veitch is confident that whatever longer term issues may arise, China looks a good bet in the short run. He is fund manager for the SVM World Equity Fund. In total, SVM manages around £500 million (around $800 million) of client money.

“The country may not avoid a harder landing in the long run, as it needs to manage the transition in its economy, but on a shorter term view of three to six months, the outlook for China is positive,” Veitch said.

He referred to speculation that Asia’s biggest economy – now the world’s second-largest – could fall into recession if China’s red-hot growth rate produced such a bubble that it would eventually implode. The recent change to the ruling Communist Party leadership, seen as continuing pro-market reforms, coupled with loose monetary and fiscal policy, has encouraged investors to assume that a “hard landing” can be avoided.

Even so, the rapid expansion of the Chinese economy over the past decade, and in particular, concerns about the lack of transparency by its banking system, for example, continues to keep alive concerns about China.

For the moment, though, SVM is positive, Veitch said.

“We are expressing our optimism on China through Hong Kong listed entities in order to avoid corporate governance issues and risk associated with investing directly in China,” he said.