A concentrated portfolio of 40-60 stocks that should benefit from Chinese economic growth.
China is fundamentally shifting its economic model from export-driven capital investment towards consumption, efficiency and productivity, led by an expanding middle-class and vast urbanisation. China has also evolved from an innovation ‘sponge’, absorbing global technologies and knowledge, to an innovation leader. With China’s significant progress in opening up its capital market, investing in Chinese companies may offer benefits from these structural trends.
We believe the following investment opportunities will continue over the next few years as the sectors benefitting from the following three structural trends are positioned for sustainable growth:
- Technology and innovation
The internet sector is highly synergistic and leverages infrastructure, user bases, unified language and culture, policy and talent. At over 700 million units, China has the largest population of mobile internet users in the world*.
- Consumption upgrading
Chinese consumers are transitioning from “having” to “having more” and “having better”. As a result, companies with strong brand premiums, differentiated products and long-term competitive advantages tend to outperform the market.
- Industry consolidation
We observe a transition where companies’ market positions are reinforcing and market leaders are gathering the cash flow and capabilities to further consolidate the market.
- BNP Paribas China Equity: a Chinese equities fund with an ‘all China’ coverage (including A-shares, H-shares, US ADRs, Taiwanese stocks). It uses fundamental bottom up stock selection to build a concentrated portfolio of 40-60 high-conviction stocks.
- Growth at Reasonable Price (GARP) investment approach with a ‘Growth Framework’: a unique feature of the fund’s investment process is the assignment of a differentiated ‘Growth Framework’ to identify companies with distinct sources of growth and to adapt to China’s fast shifting dynamics.
- Managed by BNPP AM’s Hong Kong- and Shanghai-based investment team: this local team provides a strong edge in the interpretation of political, economic, and social nuances in China. The team members have a long track record of investing in Chinese stocks and conduct more than 500 company visits per year. It also leverages on our joint venture with Chinese fund management company HFT Investment Management for A-shares coverage.
* Source: China Internet Network Information Center (CNNIC), as of 8 January 2018. This material is issued and has been prepared by BNP PARIBAS ASSET MANAGEMENT Singapore Limited and has not been reviewed by the Monetary Authority of Singapore. It is produced for information purposes only and does not constitute an offer to buy nor a solicitation to sell, nor shall it form the basis of or be relied upon in connection with any contract or commitment whatsoever or investment advice. Investors should consult their own legal and tax advisors in respect of legal, accounting, domicile and tax advice prior to investing in the fund in order to make an independent determination of the suitability and consequences of an investment therein, if permitted. Investment involves risks. Given the economic and market risks, there can be no assurance that the fund will achieve its investment objectives. The value of units in the fund and any accruing income from the units may fall or rise and investors may not get back the amount they originally invested. Please refer to the Singapore Offering Documents for further information (including the risk factors) about the fund.