China: Land of Stock Picking Opportunity

Man Group’s 2016 Unconventional Views video series is designed to present original thoughts and insights that challenge the consensus view. The videos feature leading executives from the firm’s four investment engines, Man AHL, Man GLG, Man FRM and Man Numeric, explaining their views on various investment themes.

China was the world’s fastest-growing major economies over the last two decades, and it also sported one of the world’s worst-performing stock markets. Since there was no real link between the two when China was growing – why should a relationship suddenly assert itself as China slows? In this video, Simon Pickard, Portfolio Manager at Man GLG, explains why he is positive on the outlook for China as a stock picker, and argues that because China’s stock market is still in its relative infancy, the best may be yet to come. He outlines several positive points in particular that are worth bearing in mind:

  1. Chinese companies continue to increase their share of world exports, even with a currency that has strongly appreciated in real terms over the last few years – a testimony to the efficiency of Chinese manufacturing
  2. Chinese domestic consumption continues to hold up remarkably well
  3. The period of overinvestment in China, which catalyzed both the economic overheating and the abrupt slowdown that followed, has actually created an ideal playing field for e-commerce
  4. Given the recent sell-off, a number of companies, with strong cash flows and ‘sensible’ balance sheets, are trading at what he believes to be very compelling valuations

Past performance is not indicative of future results. The value of an investment and any income derived from it can go down as well as up and investors may not get back their original amount invested. Opinions expressed are those of the author, may not be shared by all personnel of Man Group plc (‘Man’) and are subject to change without notice.

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