China's demand for Australian resources could slow down as soon as next year, as the Chinese economy will face more sophisticated infrastructure needs, according to an Asian hedge fund manager.
"Over the past 10 years the Chinese growth story was first and foremost an infrastructural rollout story," MW GaveKal chief executive Louis-Vincent Gave, who is based in Hong Kong, said.
"The infrastructure rollouts that have occurred in such a short time have been absolutely amazing and, of course, Australia has benefited massively."
However, the rollout of infrastructure is likely to slow down as the rollouts are nearing saturation levels.
"Ten years ago there was no motorway in China. [But] by the end of next year, 90 per cent of people will live within an hour's drive of a motorway. Now for me the story of the next 10 years is learning to optimise this infrastructure; putting the software on top of the hardware," Gave said.
"The roads were the hardware. The software is going to be the logistics companies, the retail distribution networks, the transportation companies, et cetera. And here it is not obvious that Australia has the biggest competitive advantage.
"It could be the US that has the biggest competitive advantage there, it could be France, it could be Germany."
A slowdown in Chinese demand for raw materials would subsequently affect the Australian stock market and investors should prepare for that shift, he said.
"For people who are thinking 'okay, I'm riding the Chinese boom through the Australian stock market', I would say maybe in a year when government and infrastructure spending is most likely to collapse, this could put you in a precarious position," he said.
Gave runs MW GaveKal, which is the underlying hedge fund manager for the Certitude Asian Opportunities Fund. The fund covers the entire Asian region, including Japan and Australia.
A former French army lieutenant, Gave made his name when he set up a fund, together with business partner Mark Hart, in late 2007 that bet against European bonds through debt insurance contracts.
The fund, called the Europe Divergence Master Fund, is said to have made several hundreds of millions of dollars last year.
Gave did not want to give any details of this fund.
"But as you could imagine it was very successful," he said.
