Hedge Clippings | Friday, 10 September 2021
China - Risk vs Opportunity
This week we had the opportunity to catch up with three fund managers in the now normal 'Zoom Room' to explore the current investment risks - or opportunities, depending on one's point of view - of investing in China.
Quite deliberately we chose individual managers who hold opposing views as we've always been advised that it takes two to create an argument. Of course, we chose carefully there, so while everything was conducted with absolute civility, we did want to explore both sides of the debate.
We were joined by Robert Swift of Delft Partners, a global asset manager with significant experience across the Asia-Pacific markets. His view can be summarised in his opening statements - opportunities in China may not be what they were, but it certainly remains an investable market.
Jack Dwyer, from Conduit Capital is a global manager, investing with an eye on the future, noting that 70% of the world's population will be millennials or Gen Z by 2030. Hedge Clippings is just getting used to being termed a Baby Boomer, so always has to calculate what these generations represent, other than billions of people with a different taste in music, and who have probably never heard of Dylan, Dire Straits, or Van 'The Man' Morrison.
But we digress - Jack is equally firmly on the opportunity side when it comes to investing in China, notwithstanding, or possibly in part as a result of recent concerns and weaknesses in Chinese-related markets. Jack believes the current situation is part of a strategic plan by Beijing that many in the West may be misunderstanding.
Alex Pollak from Loftus Peak Global Disruption Fund has a different opinion, having invested successfully across the Chinese 'theme' in the past, and while accepting that Chinese valuations might look attractive, believes that the shift away from shareholder benefits back to those of the Communist Party or State makes the risk unattractive for the time being.
As much as we tried to keep personal views and opinions out of the discussion, and accepting that our three guests are professional investors in their fields, with many decades of experience between them, compared with Hedge Clippings' mere position as a spectator on the sidelines, such was not to be the case. In any event, our bias evened up the argument, even if it didn't strengthen the 'risk' case.
You can watch the full interview here, and make your own mind up - assuming of course, you're not already on one side or the other.
Meanwhile, this week AFM's COO, Damen Purcell, also spoke with Jonathan Wu from Premium China Funds Management specifically regarding Asian Fixed Income, and some of the opportunities and challenges within the sector. You can watch the full interview here.
Staying on the China theme, at least locally, and maintaining the cynical view for which we may have been noted for previously, comes a report from Bloomberg earlier today that China is lobbying the Australian government to support its membership of a group called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, saying "China is committed to building a community with a shared future for mankind, and stands ready to work together with all the other parties to promote globalisation and regional economic integration."
Given China's attitude towards Australia over the past 18 months, this seems bizarre.
Did we mention we're a cynic?
And on that note, have a safe and happy weekend!
News & Insights
New Funds on Fundmonitors.com
The Outlook for China | Roundtable Interview with Delft Partners, Loftus Peak and Conduit Capital
Manager Insights Interview | video by Premium China Funds Management
A very good business | article by AIM
To invest or not to invest in China? | article by Delft Partners
Higher inflation can be a friend to real estate investors | article by Quay Global Investors
August 2021 Performance News
Paragon Australian Long Short Fund
Bennelong Australian Equities Fund
DS Capital Growth Fund
Bennelong Kardinia Absolute Return Fund
Cyan C3G Fund
AIM Global High Conviction Fund
Bennelong Long Short Equity Fund