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China: so far, so near.

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Investment funds
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17 Oct 2022
And so important: China is now the world's second biggest economy. Its progressive opening up to the foreign sector and the consequent increase in technology transfers and in the purchasing power of its population have put China at the centre of the world stage.

Why invest in this trend?

  • Its private consumption will be one of the highest in the world.
    It is estimated that in less than a decade private consumption in China will double, reaching 12.7 trillion dollars. A great growth opportunity for corporates that know how to respond to the needs of its population.
  • Not only is it the second world economy, it is the economy that has grown the most in the last 25 years.
    An average annual growth rate that stands at 9.5%.
  • Abundant employment, low-cost labour...
    An ideal panorama plus lax legislation for foreign investments, the results of which can already be seen in the transfer of numerous multinationals to this country, including such luxury corporates as: LVMH, Cartier, Ferragamo, Prada and Givenchy.
Invest in China 1
A new China, with high incomes, and with greater spending power and desire to purchase, which will trigger a boom in private consumption.
A changing demographic structure that will modify consumption patterns and that will offer a growth opportunity for corporates that can work out in what direction this large population group's consumption is headed.
  • China will become a high-income country.
    Thanks to development in recent years, this type of income is expected to double by 2030, from the current $6,000 to $12,000.
  • It will undergo changes in its demographic structure that will reshape consumption needs.
    Certain population groups grow: the number of people in the 35-44 age range will increase to 25 million and the group of people aged over 55 will grow to 124 million. Conversely, the age group between 20-34 years will decrease by more than 63 million and the group between 45-54 years will go down to 50.8 million.
  • Online shopping, mobile payments, etc. Digitised consumerism.
    The new trends associated with the demographic transformation will be supported by digitisation and new lifestyles in smart cities. Currently, online purchases in China are more than double those made in the United States. Another revealing piece of data places China as the leading country in the use of mobile payments: 86% compared to the world average of 34%.
Invest in China 2
An emerging middle class that also demands more and higher quality services.
  • Education.
    The new middle class wants more education and training for its children than it received.
  • Health.
    At present, spending on health in China represents only 5.2% of its GDP, compared to 17% in the United States. So it is easy to expect an increase in healthcare spending to occur in the coming years.

The response to the new demand is evident in the penetration made by quality corporates in the Asian market: 10.6%, with China, of course, taking the lead.

  • Corporates less vulnerable to economic volatility.
    With healthy development throughout the different phases of the business cycle.
  • With high, sustainable, constant income.
    Corporates that, in addition, have a high profile, applying criteria of environmental, social and corporate governance responsibility.
  • With intangible assets that are difficult to replicate: their brands.
    Corporates that have the power to set prices, with high gross operating income, recurring income, solid balance sheets and management teams of recognised professional capacity.

Source: Factset, MSIM. 14 January 2022.

Our investment universe focuses on developed and emerging markets in the Asian region, mainly in China.

  • Corporates with competitive advantages, good positioning, growth and financial strength.
  • Investments in emerging equity, with quality businesses and growing and sustainable returns.

What do the experts think?

China represents 1/5 of the world's economy and population, but this figure is not currently represented in global equity indices (4.5%). This gap is expected to narrow as the economy continues to develop and innovative corporates address the growing demand from consumerism and services.

Our investment proposal

Invest in funds through shares in infrastructure corporates around the globe.

The value of investment funds1 can fall as well as rise, and you may get back less than you invested.

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