Three Investible Themes in China A-Shares

 

August 31, 2018

 

China has been transitioning from an economy focused on fixed-asset investment to an economy focused on domestic consumption.

This new economy—which is fostering new growth drivers and encouraging China's economic transformation—covers a range of sectors, said Chinese Premier Li Keqiang in 2016. “It is not only the emerging forms of business including e-commerce, cloud computing and the Internet of things,” he explained. “It can also be found in smart manufacturing and large scale customized production in the industrial sector.”

We believe the China A-Share market presents the best exposure to China's new economy. Many opportunities it presents cannot be accessed by investing in Hong Kong- or U.S.-listed Chinese stocks. In both healthcare and consumer staples, for example, China A-Shares account for 90% of the market value of globally listed Chinese companies. Retail, automotive, and insurance are other new economy industries in which China A-companies have a major presence.

In this paper, we discuss three investible themes in China: a growing middle class, an innovation boom, and growth in healthcare spending.


Read the paper