Aussie investors underexposed to China
Australian investors remain chronically underexposed to China, the world’s second largest economy and the largest single contributor to world growth since the global financial crisis (GFC), which might lead to missing out on good opportunities, according to VanEck.
Some of these opportunities could be found in China’s ‘new economy’ sectors such as technology, healthcare, and consumer goods and services which were the sectors that benefitted the most from the rise in income, living standards and ongoing expansion of China’s middle and upper classes, the firm said.
“Wealthier consumers will favour services such as education, travel and luxury goods. We are already seeing upmarket European fashion brands such as Prada and Gucci opening up in China at a rapid rate. The nation’s wealth is beckoning offshore investment,” VanEck’s managing director and head of Asia Pacific, Arian Neiron, said.
“China alone accounts for 39% of global growth and its share of economic activity is rising as the nation’s population of around 1.5 billion people will keep growing and consuming. China will inevitably overtake the US as the world’s largest economy.”
At the same time, the opportunities to invest in china A-shares were heavily limited to only a handful of Australian institutional investors, who had the necessary approvals from the Chinese Government authorities to invest directly in the domestic China markets.
“These opportunities should not be missed. An investment in China A-shares gives investors access to China’s technology, healthcare, consumer discretionary and consumer staples sectors which are growing in importance with local companies reaping greater earnings,” Neiron said.
“We believe China’s ‘new economy’ to be one of the greatest potential sources of investment returns over the medium to long term.”
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