China and its equities markets are the elephant in the room that cannot continue to be ignored. China is a global powerhouse with a substantial portion of the world’s greatest companies. We are optimistic in areas such as alternative energy technology, the consumer segment, and technology companies. To contrast the breadth of China, today there are nearly 160 million labor force participants in the United States, in China there are currently over 750 million and its per capita income is expected to double by 2035. These participants are moving up into the middle class and much of them are educated. The country is evolving into a service-based economy and moving away from manufacturing of past decades, only 19% of China’s GDP is attributed from exports today. The country is focusing inward on its massive population of 1.4 billion and its equities market of over 4,000 publicly listed companies are more accessible and investable for global investors than ever before. Despite the continuous flow of negative western news headlines on China, we see what is happening at the macro level and find that the A-share and Hong Kong listed market are poised for significant growth in the years ahead.

 

We believe that a China allocation is a must have and that this time now is the early innings of what is to come with growth and expansion in China and due to significant equity market mechanism improvements in the last several years it is more transparent, trustworthy, and liquid than any time before.