The Chinese restarted and with it the lights were turned back on investments. Now, however, those who have to deal with long-term asset allocation are already looking at the possible drivers of the future transformation of the Asian giant. To summarize them is a report by Jasmine Kang, Analyst and Manager of the Comgest Growth China fund of Comgest.
I future trend
“I have resumed international capital flows to Chinese companies known to the investorsin particular the technological ones – highlights the Comgest expert – However, unlike what is suggested by the disproportionate weight of the sector within the indexes, we believe that it will not be the Internet that will drive the next transformation of the Chinese. We believe it will be driven by a variety of high-growth sectors, including medical technology, new energy, advanced materials and automation.”
government choices
Il government Chinese continues to reduce controls related to pandemic and in February, restrictions on package tours abroad were lifted. Although there is no official data, we are convinced that China has passed the peak of this pandemic wave. Consumption and economic activity are recovering. During the Chinese New Year holiday, box office sales surpassed 2019 levels, while passenger traffic volumes nearly caught up with them. Analysts are revising their 2023 GDP outlook upwards. Among them, Goldman Sachs raised its growth estimate to 5.5%.
The best performing stocks
The three actions who surprised the most were Ali Baba, Tencent e NetEase, but to follow we find Man Wah, Suofeiya and Anta Sports. All companies in the latter group are among the main beneficiaries of the recovery in consumer discretionary spending. Stocks allocated to pharmaceutical outsourcing and the solar energy sector also outperformed.