MILAN, Apr 24 (Class Editori) -- There is still space for further economic growth in China. "The top Asian economy offers an appealing outlook on the long term," noticed Vincent Che, Merian China Equity fund manager.
"The demographic context and the population's high density work as supports. In 2017 Chinese GDP per capita was around 8.8 thousand dollars, proving the ample opportunity of closing the gap with the 59.5 thousand of the US. Nevertheless, population dynamics won't be able to support the shift toward a new growth stage in China," added the manager. "Rather, we are looking out for the positive effects coming from the measures enforced since 2015, eventually leading to a push in equity returns. Among all of them, the most important one was the supply reform, already pushing higher sectors' ROEs – as in the banking or the steel ones – even when its effects are yet to impact the general economy. Actually, aggregate data on Chinese ROEs shows a declining curve. We believe that Chinese authorities may tackle fiscal reforms concerning income redistribution later in the future, changing the existing policies – as the one regarding the suspension of changes to social insurance contributions, in accordance with their intent to boost ROEs in a widely fashion. We can expect to see a more general shift in focus, moving from the speed of economic growth to its quality".
For international investors, "the Chinese stock market may seem enigmatic and this is one of the reasons why we believe that choosing a local asset manager can help. Our process combines advanced and systematic techniques with a more traditional fundamental stock analysis. This seems to be in contrast with the approach used by many of our competitors, who do not have access to the skills, the culture of innovation and the resources of a financial institution such as Ping An. We manage a concentrated portfolio and we believe that a high conviction approach like ours will allow us to generate alpha for investors over the long term. The quantitative screening process, which is constantly evolving, also provides for an alpha score to be assigned to each stock included in our universe. This allows us to discard around 25% within the universe with a lower score and to focus our fundamental work, including analysis on growth and valuations, on a smaller group of stocks. Similarly, portfolio construction uses quantitative techniques focused on measures such as value, quality, momentum and low volatility, not only to obtain a more balanced portfolio, but also to avoid risks and involuntary exposures".
(Source:Class Editori)
Notice: No person, organization and/or company shall disseminate or broadcast the above article on Xinhua Silk Road website without prior permission by Xinhua Silk Road.
A single purchase
