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Picking stock critical to China's success: Threadneedle
Picking stock will be critical to taking advantage of China's slowdown Threadneedle portfolio manager Gigi Chan said.
Fund manager for Threadneedle's China Opportunities fund, Chan has backed China as an area for long-term economic growth, despite its move to a more balanced economy.
She said domestic demand, driven by wage rises, urbanisation and expansion of retail operations bodes well for the future of the Chinese economy.
Consumption levels have huge growth potential driven by the transition from an investment and export-led economy to a more balanced model, Chan said.
Consumption comprises 30 per cent of China's gross domestic product, compared to 60-70 per cent among developed countries, Threadneedle said.
Chan said China has low mortgage levels as most citizens paid cash or put up large deposits and dispelled fears of a Chinese housing bubble similar to that in the US.
Looser monetary policy and financial sector reforms were further signs of positive long term growth, she said.
Chan said there was plenty of potential in China's domestic market because of the growth in consumption and also the likelihood of Beijing adopting more stimulus measures.
"Examples include the PC maker Lenovo, which has been gaining market share from the world's top PC maker Hewlett-Packard. Belle International, the leading women's shoe retailer, is another favoured holding. This is a very well run company (that) benefits from good inventory management and strong bargaining power with its suppliers. It has multiple brands, an excellent franchise and healthy cashflow generating abilities," she said.
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