Tap into the growth and diversification potential of Chinese equities.
THE OPPORTUNITY SET
Chinese equities are among the world’s largest markets, comprising both onshore and offshore companies. They represent over USD 10 trillion in market capitalisation and look set to benefit from key structural trends such as China’s transition to a service- and consumption-led economy. What’s more, they still look attractively priced relative to developed markets.
The complimentary nature of Chinese equity markets can also offer an exciting opportunity for alpha generation and diversification. Offshore companies are oriented towards the financial and energy sectors (the “old economy”), while onshore Chinese companies are focused on consumption-driven industries like consumer goods, technology, new materials and healthcare (the “new economy”). China’s offshore equity markets are therefore largely made up of large caps and onshore of small caps, deriving most of their revenues from domestic operations.
The China Equity Fund seeks to capitalize on the growth prospects of companies in the “all-china” universe. That is, onshore (China A-shares) and offshore (Hong Kong, Taiwan, US American Depository Receipts) companies.
We focus on three key structural themes:
- Technology and innovation
- Consumption upgrading
- Industry consolidation
Within each of these themes, we identify companies based on factors like industry and company dynamics, balance sheet strength, environmental, social and governance (ESG) assessment and valuations. This enables us to build a portfolio that targets quality stocks with high growth potential, strong management and cash flow predictability.
The fund is currently rated five stars by Morningstar*.
Caroline Yu Maurer heads our Chinese equities team. Caroline has 16 years’ investment experience and was named Manager of The Year for Greater China Equity in the Benchmark Fund of the Year Award 2019. She is supported by six local investment professionals (two senior portfolio managers and four analysts) from our offices in Hong Kong and Shanghai. Local presence is key to investing in China, we believe.
The team also has access to a senior economist dedicated to China, our Quantitative Research Group and our Sustainability Centre including four ESG experts based in Hong Kong.
Today, we manage over USD 1 billion in China-focused strategies.
Outlook for Chinese equities
Opportunities in China
Chinese equities – ahead of the curve
|We discuss the outlook for Chinese equities and our long-term portfolio strategy, with a focus on technology.||We believe there is a profound investment opportunity in Chinese markets driven by several factors.
|Year to date, Chinese equities have been one of the best performing markets globally. Is such performance sustainable?|
Source: BNPP AM, as of March 2020. *The five star rating has been attributed to the I, Capitalisation share class (LU0823426647) as at 31.03.2020 by Morningstar. Investments are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay, the strategies described being at risk of capital loss. There is no guarantee that the performance objective will be achieved. Past performance or achievement is not indicative of current or future performance. Copyright © 2020 Morningstar, Inc. All Rights Reserved. The overall star rating for each fund is based on a weighted average of the number of stars assigned to it in the three-, five-, and 10-year rating periods. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.