Top Chinese equity manager Bin Shi is positive on the Chinese government’s structural changes plan but believes their success will rest on how quickly they can be introduced.
Speaking to Citywire Asia during a recent visit to Singapore, the Citywire + rated UBS manager said China setting the pace for solid foundations to underpin its new economic goals.
‘The direction China’s leaders want to take us is very clear from their perspective, the only uncertainty is the timing of the execution,' Shi said.
'The faster and deeper they introduce the reforms the more successful they will be. Speed is very important for them to work properly.’
The Hong Kong-based manager is currently the fifth best performing Great China equity manager over five years having returned 116.5% while the sector’s average manager has 83.6%.
China in the driving seat
The reforms are aimed at tackling the different structural issues China has to deal with and Shi believes that once the country get going, these issues could be dealt with in quick succession.
‘China is like an automobile, it can take a while to get it into motion but when it starts and gains momentum, it will be hard to stop it.’
Often, Shi added, people tend to underestimate the initial impact a move like this can have on China’s economy, as it will likely have deep-rooted impact on the country’s future prospects.
‘Looking back in China’s history to when it entered the WTO [World Trade Organisation], the market’s reaction to the news was not huge but it had a huge impact on the Chinese economy.’
In with the new
Over the last year Shi said he has been focusing on China’s new economy names in healthcare, internet and consumer, while the market has now caught up with this trend.
‘I still like the new economy, these sectors still have a way to go in terms of healthcare expansion, internet penetration, etc.’
‘We’ve gone beyond the discovery stage in these sectors and we have reached the next stage which is continued growth stage. The valuations re-ratings are now done.’
His biggest stock in both his Greater China and China Opportunities funds is Tencent, the country’s largest and most used internet service portal, while he also cited Chinese software company Kingsoft as another strong tech player.
Within his China Opportunities fund, where he currently is waiting for the right moment to redeploy some of his cash which stands at 17% of his portfolio’s total assets, Shi said he is also keen on the education services sector and has been investing in after school education group TAL for some time.
‘Feedback we have been getting from our friends is it’s hard to get a spot in these courses because they have such a good reputation.’
‘We have always liked the company for a long time and to hear that feedback from end users gives us that extra level of confidence. They have a very good reputation and have further room to expand.’