Jim Armitage: Most experts won't touch China with a bargepole

US Outlook Mark Makepeace, chief executive of FTSE, is clearly a glass-half-full kind of chap. He's been in Hong Kong this week, drumming up business for firms to raise money through listing on his indices, and a jolly good job I'm sure he's doing.

He tells us that Chinese companies will be joining global equity benchmarks in droves in the coming three to five years as reforms to business practices mean they are now becoming safer places to invest.

Really? From what fund managers tell me, China remains mostly untouchable. Widespread fraud, near non-existent corporate governance and opaque accounts mean Chinese companies are strictly in the not-with-a-bargepole category for all but the most specialist fund managers. Even the cleanest of firms are still deemed high risk.

Forget China's tiger economy, its stock market lagged the rest of the region last year. And of the 154 businesses that floated there in 2012, more than 60 are trading below their listing price.

That's not to say that Chinese stock market officials aren't trying. They have been beefing up the regulatory system around listed companies in an attempt to kick out the dross. The China Securities Regulatory Commission staged a global roadshow recently to drum up support.

But China remains, and will remain, an unpredictable and volatile place for many firms to do business. Their share prices and dividend payments will reflect that.

If the country's companies do join the FTSE's indices around the world, many a tracker fund will have to start investing in them.

For investment managers looking to pick individual stocks, I wonder how easy they will find doing adequate, trustworthy due diligence before risking their – or our – cash? I suspect it will be nigh on impossible.