Keeping sight of the China investment fundamentals
Despite the uncertainty being created because of the Corona virus, investors should not lose sight of the fundamentals and look to the value being created as China’s middle class continues to grow and, with it, consumer demand.
Any examination of the fundamentals indicates that while the short-term impact of the Corona virus should not be ignored, nor should the rapid growth of urbanisation in China, its rapid growth in turning out tertiary education graduates and the degree to which this is creating wealth and evolving a significant middle class willing to spend.
Premium China Funds Management executive director and Chief Investment Specialist, Jonathan Wu said that investors were right to be concerned about the impact of the Corona virus but should not let it skew their long-term exposures to China in circumstances where it would not significantly alter the fundamentals.
He said investors needed to consider the degree and length of time during which the SARS virus impacted markets in 2003 to put some accurate context around how they should be factoring in the Corona virus outbreak.
“The seriousness of the Corona virus should not be under-estimated but nor should investors lose sight of the fundamentals which have seen China grow to become the world’s second-largest economy or the manner in which this has propelled millions of people out of poverty,” Wu said.
In doing so, the Premium China Funds Management director pointed to data suggesting that China was on the cusp of a surge in consumerism, with a growing and aspirational China middle class looking to take advantage of their new-found wealth.
“Consumer spending is still low in China but all the data points to it rising significantly with consequent benefits for both locally-based and international companies with the ability to meet that demand,” he said.
In doing so, Wu pointed to recent research utilised by PCFM’s investment managers, Value Partners indicating the degree to which China’s growing middle class represented a powerful cohort of aspirational consumersIn contrast to equity markets, our Asian fixed interest strategy has performed reasonably well since the virus outbreak.
“The immediate impacts of the Corona virus are yet to fully play out and are thoughts are with those suffering. As investors we are focused on the fundamentals and are closely watching our favoured Consumer names with a view to increasing positions,” he said.
ABOUT PREMIUM CHINA FUNDS MANAGEMENT
Premium China Funds Management (PCFM) is a boutique funds management group providing specialist Asian equity and fixed-income funds to both Australian and New Zealand investors.
Capturing the growing economies and influence of emerging Asia, PCFM has developed 4 actively managed funds – the Premium China Fund, Premium Asia Fund, Premium Asia Property Fund and Premium Asia Income Fund.
The funds are managed by a large and experienced team with offices in Hong Kong, Shanghai, Singapore and Kuala Lumpur. The directors and investment managers of Premium and its fund offerings have extensive knowledge in Asian equity and credit markets, wealth management, and other financial services.
For further information, please feel free to contact:
Jonathan Wu – Chief Investment Specialist
Jonathan.wu@premiumasiafunds.com.au
0416 031 676
Derek Paas – Asia Investment Specialist | State Manager (NSW/QLD/WA/ACT)
Derek.paas@premiumasiafunds.com.au
0406 608 388