Has China won the COVID-19 investment race by being first out?
China was first into the COVID-19 market downturn and if China-focused investment house, Value Partners is any judge key Chinese-based companies are already well into recovery phase.
Value Partners is the Hong Kong-based portfolio manager for Premium China Funds Management and its deputy chief investment officer, Renee Huang, believes the market dynamic created by China having been the first country to be impacted by the coronavirus means that it is likely to be the first out while other major players such as the US continue to confront the virus issue.
Huang noted where China appeared to be with respect to recovery from the coronavirus and that, by mid-March production activity was back to about 80% of normal with the country targeting reaching 90% by the end of March.
She said that on the available evidence, the 90% figure might ultimately prove to be conservative.
Huang said that where China was concerned, the question was whether it was a U-shaped or V-shaped recovery in circumstances where China was no longer as focused on exports but could rely much more heavily on domestic consumption.
She said that when this was taken together with the state of global markets, it was evident that China was “going to be first in, and then first out”.
“That is why we are confident. China has already faced the worst and has entered recovery,” Huang said.
Looking at investment options, Huang pointed to China’s relatively low levels of per capita consumption and the scope for growth in a post-COVID-19 environment.
The Value Partners analysis pointed to Chinese consumers becoming more health conscious with the likelihood of that high-quality consumer brands would grow faster with the best of those brands experiencing the strongest recovery.
The analysis also pointed to the continuing opportunities in the information technology sphere, including 5G.
Performance of Shanghai Composite index versus ASX 200 since start of 2020 to 26 March, 2020.
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AUTHOR
Mike Taylor
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