The stocks Magellan’s Douglass backs for China exposure
Magellan fund manager Hamish Douglass has increased his allocation to China from 14% a year ago to 25%, via exposure to six stocks.
Speaking at a Magellan conference in Sydney, Douglass, who manages the Magellan Global fund, said he did not believe it was too risky to invest in China at the moment.
Regarding coronavirus, Douglass disagreed that it was the next pandemic but that he would “get excited” if the situation worsened as it could present buying opportunities.
“We are not changing our portfolio, if it gets worse then I’ll get excited because it will present interesting valuations, but things are not at those mouth-watering valuations yet. It will be very volatile.
“It will have a short-term economic impact but it is very hard to know, I don’t regard it as the next Global Financial Crisis.”
As well as US-listed companies which had exposure to China such as Apple, Douglass had also now invested in Chinese companies Alibaba and Tencent.
“We think it is risky not to invest in China over the next 20 years but we only look at quality companies, we do a lot of due diligence on companies and we diversify our risk,” the Alpha manager said.
“We used to just be invested in Apple, Starbucks and Yum Brands and now we have also added LVMH, Estee Lauder, Alibaba and Tencent.”
He particularly highlighted Starbucks as a great way to access the Chinese middle class, where it was opening a store in China every 15 hours. There were currently 4,300 stores in China and this was expected to increase to 13,000 stores by 2029. Some 40% of Starbucks profit growth was coming from China, Douglass said.
AUTHOR
Laura Dew
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