Australian investors should shift focus to China's domestic market growth
Australian investors' focus on local multi-nationals as a means of accessing overseas growth in Asia means they are missing out on the rise of domestic Asian businesses that are growing faster than multi-nationals, according to Fidelity International.
"We are seeing the emergence of some national brand champions in sporting goods and in fashion," said portfolio manager at Fidelity International, David Urquhart. "These companies have an increasingly strong position in their home market, which delivers enormous growth potential. There is also the possibility they will gain a presence in the global marketplace - it is all ahead of them."
As an example, Urquhart mentioned Chinese Olympian Li Ning's sportswear company, which is the leading sportswear retailer by sales volume and number three in the athletic market by sales.
"It has nationwide sale coverage and is benefiting from changing lifestyle, robust domestic consumption and high growth levels," he said.
He added that there are also attractive investment opportunities in infrastructure.
"The majority of government stimulus has been focused on infrastructure development," said Urquhart.
"The vast sum of money being channelled into the development of Asia's infrastructure is good news for the outlook for the region and its equity markets. Some 3.8 billion people will benefit from planned urbanisation, whether it is better transport links or the creation of new jobs. In return, the region will see the rise of the consumer and growth of the middle class - and increased domestic demand.
"Overall, the outlook for the Asian region continues to be strong, with South East Asia and China showing the strongest buying opportunities for investors over the longer term and leading the recovery phase.
"GDP growth for developing Asia is set to reach over 6 per cent next year, which is more than double that expected in the Western hemisphere."
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
