The growing dominance of Asian economies could see investors benefit from China’s secular boom over the next five years, according to an industry expert.
The longer-term outlook for China looks positive as a large percentage of its population will move into the middle class and therefore generate strong economic growth, Premium China Funds Management executive director Simon Wu said.
“In the next five years, according to the International Monetary Fund, 16 per cent of the world’s growth is coming from Asia,” he said.
“In the last 16 years there have been no shortages of external shocks. Any external shocks will create a cyclical swing, but the key thing we have to look at is if China is in a secular boom or not. The answer in my view is that yes, China is in a secular boom for the next 10 years.
“Therefore, if you’re looking at investing in China and if you stick with the market long enough with a good fund manager, you will get the rewards. I believe, in the secular bull run, you should be able to get pretty good rewards at least over the next five years.”
For fund managers and investors wanting to invest in the Asian equity market, Wu suggested they were best placed to have a team on the ground.
“I do not believe fund managers can fly in and fly out and become experts in Asian investments,” he said.
“A lot of those companies are not necessarily transparent and many are fairly controlled, sometimes actually lasting for three generations. You have to know the family, know the people, and also follow the story for a long period of time.
“Our fund manager actually has a team of 25 people on the ground covering 2000 companies per year and I think that’s crucial.”
