At its annual investment briefing in Sydney, Premium Asia Funds Management forecasted China’s reversal of its zero-COVID policy to be a major economic trend of this year.
Jonathan Wu, executive director at Premium Asia Funds Management, reflected that China faced different economic issues to the Western world, particularly due to Chinese inflation remaining low.
Following the nation’s sudden re-opening in late last year, sentiment from and towards China was predicted to improve in the long-term.
“It is our view that a reduction in geopolitical risk would be very welcome to the investing community, but especially to markets post-2021 and 2022,” said Wu.
This was particularly evident as the firm noted a 20% increase in foreign direct investment in China towards the end of 2022, which was expected to grow further in 2023.
The executive director contrasted other fund managers, who recommended less reliance on China due to geopolitical tensions with the US.
Premium Asia suggested for investors to look beyond well-known names and instead to hunt for smaller yet successful companies.
Wu continued: “Our own funds have also increased their exposure to the domestic Chinese consumption recovery, investing in areas such as jewellery, catering travel and retail”.
Frank Tsui, senior fund manager at Hong Kong-based firm Value Partners Group, also identified China’s ESG leadership in manufacturing electric vehicles and solar components as a source of growth.
Beyond China, Wu encouraged investors to look towards other Asian economies, particularly in the South East.
India presented strong opportunities with a robust recovery on the horizon, whilst Indonesia would benefit from increased energy prices as a net energy exporter. Moreover, countries including Vietnam, Malaysia and Thailand were taking strong steps towards increased economic growth.
“Resetting China with a COVID opening, an accommodating fiscal and monetary policy will enable China to grow strongly and for Asia and the world to prosper,” Wu added.
