As Bridgewater Associates founder Ray Dalio told the Sohn Hearts & Minds conference on Friday, there are only two big horses in the world economy — the US and China.
He said China had seen big in- creases in per capita income while its role in the world economy had become significantly larger.
Its poverty rate had fallen and life expectancy had increased by 10 years, while the country was a centre for innovation and entrepreneurialism.
The rising role of China was a key theme of this year’s Sohn conference.
“There is no more competitive place in the world in terms of new technology and new innovation than China,” Mr Dalio said.
There was no competition from Europe whose economy was “dead in the water”.
Oaktree Capital’s Howard Marks described China as the “teenager” of the world economy.
“Europe and Japan are economic senior citizens. The US is a mature adult and China is a teenager. Like a teenager it will have good days and bad days but its best decades are ahead of it.”
He said China’s economic growth prospects meant investors should look at putting money into the country over the long term.
“For the long term, you want to have some significant investment there,” he said.
Tribeca Investment Partners, fund manager Jun Bei Liu tipped the A2 Milk company for its exposure to the growing infant formula market in China. Liu, whose stock tip last year of English language teaching company New Oriental Education & Technology was one of the top performing recommendations of the 2018 Sohn conference, returned to the theme of the buying power of the Chinese consumer with this year’s recommendation.
She said A2 had a big potential for sales in China’s mother-and-baby store market as well as its sales offline.
“A2 is in a unique position to take advantage of the market in China,” she said.
She said its products were al- ready among the top 10 selling brands online in China.
“It is building a premium brand in a competitive market,” she said. “Where others have failed, A2 has done it incredibly well.”
She said A2 had a strong competitive edge in the China market as it already had a licence to sell into bricks-and-mortar stores.
Ms Liu said A2’s share price was not expensive when one considered its potential in the Chinese infant formula market. “Some may say A2 looks expensive on traditional measurements but it is not (expensive) for growth.”
Beeneet Kothari of Tekne Capital Management recommended another Chinese-based stock, Nasdaq listed GDS Holdings. The company, which began as an IT service provider, is a data centre group with operations in major cities including Shanghai, Beijing, Chengdu and Shenzhen.
It has a client base of more 600 companies in China including e- commerce giants Alibaba and Tencent.
This article was originally posted on The Australian here.
Licensed by Copyright Agency. You must not copy this work without permission.
Concerns about Chinese influence in politics and universities may be at fever pitch, but the reality is that some of Australia’s retirement savings will help fuel a predicted $US600 billion ($885 billion) inflow into mainland stocks over the next decade.
Friday’s Sohn Hearts & Minds conference is barely in the rear view mirror, but already Hobart’s Federation Concert Hall is almost entirely booked solid for next year’s event, taking place on November 13 for the first time on the Apple Isle. At $3500 a ticket, that shows how popular the thing’s become.
The majority of investors who attend the Sohn Hearts & Minds conferences in Australia are there to learn about the dozen or so stock tips from leading fund managers as well as make very large donations to a range of medical research institutes.
Developed economies are not heading for another debt reckoning or recession, but are in a risky environment where governments are likely to print money to fund their spending, warns Ray Dalio, the founder of $180bn giant hedge fund Bridgewater Associates.
Veteran investor Howard Marks says the abandonment of the WeWork float, the poor performance of US IPOs in 2019 and the punishment of bad news in US debt markets are all early signs that discipline is starting to return to financial markets, and investors may no longer be rewarded for holding the riskiest assets.
Philip King might seem an unlikely ally for Reserve Bank governor Philip Lowe. The chief investment officer at Regal Funds Management has been knocking out returns in the teens to mid-30s for a growing roster of funds for the past 15 years.
The top-performing fund manager from last year's Sohn Hearts and Minds investment conference has criticised the buy now, pay later (BNPL) sector as operating in a "fuzzy" regulatory zone and engaging in a game of trying to be acquired before a regulatory crackdown.
Beeneet Kothari, the New York hedge fund manager who pitched the best-performing stock recommendation at the prestigious Sohn Hearts & Minds Conference in 2018 — has warned investors of the risks faced by one of Australia’s favourite tech stocks, Afterpay Touch.
Buy now pay later providers like Afterpay and Klarna are risky businesses operating in a "fuzzy legal area", and are likely to be regulated in coming years or be swamped by larger companies, says US fintech investor Beeneet Kothari.
Tribeca Investment Partners’ Jun Bei Liu provided one of the star performers for last year’s Sohn Hearts and Mind conference with China-based education group New Oriental Education and Technology, which has gained 81 per cent in the last year.
TDM Growth Partners' Hamish Corlett reckons the reversal of fortunes for the once high-flying WeWork may be a reality check for fast-growing private companies with complex ownership structures, and the torrent of money that has propelled valuations ever higher.
Rob Kapito, co-founder of $10 trillion investment giant BlackRock, says a global shortage of investable assets will help the sharemarket grind higher over the long term as dips in equity and bond markets are quickly met by investors hungry for returns.
Rob Kapito, the head of the world's largest money manager BlackRock, says there is more than $US50 trillion ($73 trillion) in cash sitting idle in portfolios around the world due to a lack of investment opportunities and weak returns.
Oaktree Capital’s Howard Marks has warned that it is time to take a defensive approach to investing, opting for bonds over stocks, investing in the US rather than emerging markets and choosing larger, more stable companies to invest in over smaller growth stocks.
When the founder and co-chairman of the world’s largest hedge fund likens the global environment to that of the 1930s and sees the current tensions between the US and China as something wider, more permanent and more threatening than a trade conflict it is disconcerting.
