Opportunities and Threats Galore: Insights into China’s Evolving Growth Story
Economic Repositioning, Changing Demographics and a Growing Appetite for Technology Are Creating New Investment Opportunities in China
China’s $13.4 trillion economy presents investors with plenty of appeal. But taking advantage of this market’s opportunities—and navigating its risks—requires deep knowledge of the Chinese economy’s rapidly evolving landscape. “Over the past four decades, China’s growth has come predominantly from large-scale capital investment and market liberalisation,” says Ashley Hsu, Portfolio Manager of the Mirae Asset China Growth Equity Fund. “Today, however, that story has changed—and so have the related investment opportunities.”
Mirae Asset has identified three key trends driving change in China’s markets:
- Consumer spending – Private consumption has become a greater driver of the Chinese economy, fueling the majority of GDP growth in recent years. And consumers can play an even bigger economic role: Consumer activity in China makes up only 40% of overall GDP, compared to 70% in the U.S. and 55% in Japan2.
- Demographic shifts – By 2027, today’s relatively small Chinese middle class is expected to expand to roughly 65% of households. Demographic shifts, such as an aging population and larger families following the end of the one-child policy, are likely to fuel that middle-class expansion. Rising incomes also have given rise to an enthusiastic class of retail investors, who now account for nearly 80% of the country’s annual trading3.
- Technological advancements – China has positioned itself as a global technology provider, but its growing consumer class has made it an increasingly attractive consumer of technology as well. From the rise of AI to a boom in big data, China’s economy stands to be a prime beneficiary from the continued advancement in technology.
Mirae Asset is committed to helping investors understand and navigate the evolving economic pictures of Emerging Markets. On 12 November 2019, join Rahul Chadha, Chief Investment Officer of Mirae Asset Global Investment (Hong Kong) for a discussion of the current economic situation and outlook for Emerging Markets, including insights on investment opportunities and risks.
“We believe Emerging Markets represent a compelling investment opportunity for long-term investors, especially amid ongoing volatility and uncertainty throughout global markets,” Chadha says.
In addition to overseeing Mirae Asset’s Investment Unit, Chadha manages a number of the firm’s Asia Pacific equity portfolios and frequently interacts with portfolio companies and investors to communicate the firm’s investment philosophy and views on Asian markets.