Speaking at a lunch in Sydney, PM Capital portfolio manager Kevin Bertoli said that by using a fundamental bottom-up approach investors can find “genuine value in industries supported by rising domestic consumption levels” or those benefiting from changes to consumer consumption patterns”.
“We believe the evolution of more than four billion consumers in the region creates a large investment opportunity,” said Mr Bertoli.
Investors using quasi-index focused strategies or a macro view miss out on these “true opportunities”, he believes, since these types of strategy only offer an exposure to larger, higher risk sectors such as Asian banks or commodity companies.
Mr Bertoli said he is sceptical about the long-term growth of this type of sector in Asia.
“Governments in Asia understand better than anyone that the unbalanced economies that they’ve run in the last decade are unsustainable; they need to transition to one that’s more driven by domestic consumption,” Mr Bertoli said.
The government is consequently supporting the shift to a consumption-led economy through the interest rates, reform, taxation and a consistent increase in real wages, he said.
“If you look at provinces in China, minimum wages are actually increasing by 10 to 15 per cent per annum and this structural reform driven by government bodies is actually helping this shift,” Mr Bertoli added.
