China’s middle class growth story
Despite current diplomatic tensions, China remains an undeniable investment destination with the nation poised for a further round of growth as its population becomes wealthier and discretionary consumption increases.
And for Premium China Funds Management it is the accurate identification of those growth areas, such as technology, healthcare and education which makes China a necessary ongoing investment focus.
Premium China Chief Investment Specialist, Jonathan Wu, said that notwithstanding critics of China, investors needed to recognise the manner in which the nation had succeeded in lifting its population out of poverty, creating a significant and growing middle class and with it consumption. It is an extraordinary historical event with something like half a billion people lifted out of poverty in little more than a generation. Hundreds of million more will follow soon.
“What is more, China has achieved that demographic change in much the same way as the other major Asian growth economies such as Korea, Japan and Taiwan albeit it has the advantage of an autocratic style of Government,” he said.
“The bottom line is that the Government has succeeded in raising the overall wealth of its population giving rise to an expanding middle class,” Wu said. “In our view, this gives rise to investment opportunities which will last decades.”
“We see those opportunities evolving out of increased consumption of technology, healthcare and education and our team has positioned our investments accordingly,” he said.
Explaining his fund’s underlying investment rationale, Wu pointed to not only China’s growth in pharmaceutical manufacture and consumption, but how it compared to the developed economies of the US, France, United Kingdom and Japan.
He noted that US pharmaceutical expenditure as a percentage of gross domestic product stood at 15.2%, while that of France stood at 11.2% while China currently stood at just 5.1%.
“So, allowing for China’s population and its growing wealth, you can see the investment potential,” he said.
Wu noted that China’s overall consumption of services was also low by international comparisons standing at 33% of consumer spending, compared to 55% in Taiwan and 69% in the US.
“Quite simply, China’s growth potential remains significant,” he said.
ABOUT PREMIUM CHINA FUNDS MANAGEMENT
Premium China Funds Management (PCFM) is a boutique funds management group providing specialist Asian equity and fixed-income funds to both Australian and New Zealand investors.
Capturing the growing economies and influence of emerging Asia, PCFM has developed 4 actively managed funds – the Premium China Fund, Premium Asia Fund, Premium Asia Property Fund and Premium Asia Income Fund.
The funds are managed by a large and experienced team with offices in Hong Kong, Shanghai, Singapore and Kuala Lumpur. The directors and investment managers of Premium and its fund offerings have extensive knowledge in Asian equity and credit markets, wealth management, and other financial services.
Jonathan Wu – Executive Director | Head of Distribution and Operations | Chief Investment Specialist
Jonathan.wu@premiumasiafunds.com.au
0416 031 676
Derek Paas – Asia Investment Specialist | State Manager (NSW/QLD/WA/ACT/NT)
Derek.paas@premiumasiafunds.com.au
0406 608 388