Back in the early 2000s, I was introduced to Shifeng Ke, a Chinese based fund manager who at the time worked for Martin Currie Investment Management Group, a well known scottish group and the first foreign fund manager to offer a unit trust which invested solely in local China A shares (The Martin Currie China A Share Fund) at a time when most foreign managers were accessing China via Hong Kong (‘H shares’) or not at all. I managed to persuade him to meet with one of our Study Tour groups in 2007 and have followed him ever since, including after he left Martin Currie and co-founded his own firm, Open Door Group, in 2011.
As a result of his longevity, experience and amazing track record from being on the ground as a local fund manager in China for almost 25 years, I highly recommend that you read the latest thoughts from Open Door on “What’s going on in China?” which covers a wide range of hot topics, from China’s significant shift in economic policy priorities to Evergrande’s debt crisis. It also provides important local insights on “What has changed in China” and “What has NOT changed” and makes the crucial point that “foreign portfolio investment in Greater China is still low relative to the benchmark (China holds a 34% weighting in the MSCI Emerging Markets Index but foreign investors own just 4.1% of the domestic A-share market)” suggesting that a lot more foreign institutional investment will flow into China in the near future.
China has the world’s largest economy on a PPP basis and accounts for 33% of global economic growth – more than the United States, Europe, Middle East, Africa, Latin America and Japan combined – and yet foreign investors generally have little exposure to China in their portfolios. Those that do access the China market often adopt a passive approach and invest via an index fund or in the larger well known brands, a strategy which misses out on the 4,500 plus companies listed on the Shanghai and Shenzhen stock markets run by ambitious entrepreneurs with high growth prospects.
Open Door specialise in investing in the emerging names of the future, requiring an experienced team on the ground to assess opportunities, conduct research and make decisions, and this has delivered strong and consistent investment returns over 25 years.
Doing business in China is not for everyone, but you should consider investing in China as a means to diversify your portfolio and access fast growing companies which will benefit from success from trading within the world’s fastest growing economy. I am now working with Shifeng to access motivated investors in Australia so, if you have an interest, please get in touch