POWERED BY MOMENTUM MEDIA
Change of government will not affect China's equity market: Kerry Series
Despite a proposed change of government and the popular view of a slower Chinese economy, the chief investment officer of Eight Investment Partners, Kerry Series, says China's equity market and the resources boom will continue to grow.
Series said a combination of low valuation stocks, good corporate profitability, low inflation and a gradual increase in GDP growth over the year will "spark a return of investors to Chinese equities … (which) will become among the best performing equities in the world over the course of the next two to three years".
He said despite the popular bearish view of China's economy, the Asian equity market has grown since March 2009, and if the "36-year valuation history of Asia holds and the current profitability of Asian companies hold", only an external force impacting on China's economy will affect the equity market.
John Lee, adjunct associate professor, Centre of International Security Studies, The University of Sydney said GDP growth will continue to be the main priority for China's new government.
He said growth and maintaining the China Communist Party's (CCP) power are linked to current macro policies.
"There is nothing in the pipeline at this stage to suggest that its' leaders will do really what it needs to do to significantly raise household income which would allow it to rebalance its' economy," he said.
Series said construction in provinces such as Henan are only 25-30 per cent complete and will continue to drive the resources boom.
"They've got the money and the projects and the will. I kind of look at that and say, the resources boom is continuing for this next five-year period," Series said.
He said evidence does not support slower GDP growth and China's transition to a consumption based economy.
"I don't see it in the numbers. If you look at fixed asset investment year-on-year versus the retail sales year-on-year, fixed asset investment is still higher, so I can see the appealing rhetoric of it but I don't see any evidence of it, and I don't see that it makes sense for the CCP," he said.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
In this latest edition, Anna Shelley, CIO at AMP, shares the fund’s approach to current market conditions and where it continues to uncover key opportunities.
The mega fund has announced a $2.2 billion investment in a leading data centre platform, bringing its global real assets portfolio to nearly $60 billion.
In this latest edition, Australian Retirement Trust’s head of global real assets Michael Weaver explains the fund’s approach to finding new opportunities as it surpasses $300 billion in funds under management.
Fund managers remain hopeful for a Chinese revival story despite the “disappointing” stimulus package announced this week.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
