The fast view
As we entered 2023, there was much excitement about China’s economy re-opening and the positive impact this would have on the broader equity market. But the anticipated recovery hasn’t happened, with optimism fading following a slew of weaker-than-expected macro data. To find out what is actually happening on the ground, I made my first trip to the mainland since before the pandemic, visiting eight companies – all holdings within 4Factor – across five cities. None of the corporate management that I spoke to expect significant stimulus measures, so it is down to the individual companies to deliver growth for shareholders. In this note, I share some observations from my meetings, and explain why I left the country feeling more positive than when I landed.
- The Chinese reopening has been tepid at best, with a slew of weak macroeconomic data. Investor sentiment has taken a dive, but all is not lost.
- I visited eight companies across five cities in China and walked away more optimistic about the prospects for quality companies, despite the backdrop.
- The trend of premiumisation – consumers being willing to buy new products at a higher price point – was also very apparent, from shopping malls to train travel.
- ESG considerations were also more prominent, aligning with the country in general. A number of green ‘Beautiful China’ initiatives were in place.
