Tech growth company opps in China

Volatility in Chinese markets is down to a “smart phone revolution” and rising e-commerce presenting opportunities for savvy investors, writes Sarah Davidson

Tech growth company opps in China

Speaking at a roundtable event in Edinburgh last week Baillie Gifford fund manager Ewan Markson-Brown said he believed investor concerns over Chinese stock market valuations were reflective of a “deepening use of technology” in Chinese society and the rapid rise in mobile use and e-commerce.

He said the “noise” around “murky picture” were obscuring investors from seeing some of the “best long term growth companies in the Asia Pacific region”.

He said: “E-commerce in China is growing at a much faster rate than in the US even. What we’re seeing is information deepening and a smart phone revolution.

“We think what is actually going on is the deepening of technology into Chinese society. That means the winners of the future are different from the winners of the past decade.”

Markson-Brown suggested that the sharp revaluation of the Shanghai index, which has crashed around 40% from its peak in June, was describing a “switch from hard assets into soft”.

He said: “Returns on investment from a shopping mall in China are down; areas which have relied on coal production are suffering deep depression; but companies in the social media sectors such as Tencent, Alibaba and JD.com are where the growth will come from.”

China’s stock market has suffered extreme volatility this year after retail investors piled into the market pushing prices up 150% between June 2014 and June 2015.

Markson-Brown added: “The premium for growth is now much smaller and we think it’s a great time to buy.”

Markson-Brown runs the Ballie Gifford Pacific Horizon Investment Trust.

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