In a recent article for The Wall Street Journal, columnist Jason Zweig argues that although many U.S. investors appear to be increasing their exposure to China (hoping for high returns due to the country’s economic growth), “those hopes could end in heartache when expectations collide with reality.”

Zweig points out: “History shows that countries with faster-growing economies often produce lower—not higher—stock-market returns.”

Since Chinese stocks peaked in 2007, Zweig explains, they have lost an average of 0.2% annually, lagging the S&P 500 by eight percentage points every year (counting reinvested dividends). Zweig cites findings (published last year in the Financial Analysts Journal) from a study that analyzed the differences in stock-market returns across 43 countries between 1997 and 2017. One of the report’s authors, Jean-Francois L’Her, said in an interview, “If you told most investment professionals that you would give them future dividend yields, inflation and economic growth rates, they would probably believe they could rank the future stock returns across countries very well. That has not been the case in the past 20 years—not by far.”

According to L’Her, 80% of the divergence across markets over the past two decades is explained by the expansion or contraction of shares. When, for example, companies buy back shares, it makes the remaining shares more valuable since corporate profits are distributed among fewer shares, boosting returns. On the other hand, the study noted, when companies or governments (like China) sell more stock to the public it makes shares more plentiful but dilutes ownership and reduces value on a per-share basis. Corporate profits are spread further, causing future returns per share to fall.

Over the twenty-year study period, China’s market capitalization grew by a stunning 27.5%, but most of that growth (26.5 percentage points) came from the issuance of new shares. “In other words,” Zweig explains, “while the Chinese market grew enormously, nearly all that increase came from the addition of new capital—not from the growth of the money investors already staked.”

L’Her asserted, “People tend to be blinded by growth, so they may overpay for stocks in countries with fast-growing economies. You should consider additional factors. Do no stop at economic growth. It does not inform you about future returns the way you may think it should.”