China not the world's panacea: Magellan

Magellan Asset Management chief exececutive Hamish Douglas told advisers at a roadshow in Wellington that China's economy is too small to lead the world out of recovery on its own, and that they should not pile into the world's fourth largest economy for the sake of it.

"China's not large enough to overcome the huge issues facing North America, Eruope and Japan," Douglas said. "I don't think people understand the simple mathematics very well."

Still, Douglas said there is no doubt that emerging markets are the next growth area and investors need to take advantage of the massive urbanisation that is underway, though they can do so by investing in companies with exposure to emerging markets, such as Proctor & Gamble.

"The major theme will be emerging markets over the next 20 years as urbanisation is the major driver of economic growth in places like India and China," he said. "If people just invest in China for the next 10 years if could be a difficult experience."