If you want a guide to the latest trends in the Chinese stock market, the must-have items for stylish and wealthy young women are some of the best clues.
Chinese fashionistas are lovers of luxury brands who still love Louis Vuitton bags.
They also prefer sneakers from Li-Ning, the chic Chinese sportswear line founded by the Olympic gymnast of the same name. The company’s shares have doubled since March.
Land of Opportunities: But betting on China is a strategy best suited for those who can be phlegmatic about geopolitical tensions and afford to take some risk and take a long-term view
Nio’s electric cars – whose founder William Li is known as China’s Elon Musk – are another status symbol. Kweichow Moutai is the chic supplier of spirits, while Nongfu Spring is the expensive hip mineral water.
Nongfu Spring shares soared during their stock market debut earlier this month.
As of March, Kweichou Moutai’s shares are up 64 percent, while US-listed shares of Nio are up from less than $ 2 to $ 18, driven by the rush to take advantage of the changing tastes of the more affluent members of the 1.4 billion Chinese population.
This mini cultural revolution was accompanied by other shifts.
Catherine Yeung, investment director at Fidelity International, which heads the China Special Situations trust and the China Consumer Fund, said, “Households that ordered all their lockdown meals from Meituan Dianping, a delivery service, have continued with this.” Meituan’s shares, which stood at HK $ 72 in March, are now at HK $ 232.
But should British investors support these trends by moving to funds that invest in such companies and also have stakes in Chinese internet giants?
Confidence in businesses is so great that the Witan Pacific Trust, now managed by Baillie Gifford, is getting a makeover.
The Baillie Gifford China Growth Trust will focus exclusively on listed and unlisted Chinese stocks.
However, taking a bet on China is a strategy best suited to those who can be phlegmatic about geopolitical tensions and can afford to take some risk and take a long-term view.
This month, Chinese retail – which lagged behind the broader recovery of the economy – returned to growth for the first time since the coronavirus outbreak. At the same time, the trade war between the US and China is intensifying.
With the US elections 39 days away, a row is raging over Tik Tok, the Chinese video app facing a US ban over security concerns.
Chinese fashionistas are lovers of luxury brands who still love Louis Vuitton bags (photo)
This could be prevented if tech group Oracle and supermarket giant Walmart acquire a stake in Tik Tok. But the Chinese press has rejected the deal, and Bytedance, the owner of Tik Tok, is not happy.
The White House is also disapproved of by the internet titans, the $ 698 billion Alibaba and Tencent, worth $ 616 billion.
The latter stores data on US citizens through its gaming arm that has purchased from companies such as Epic, the maker of Fortnite. And of course there is the fight about Huawei, the Chinese telecom giant.
The US stance on China will remain harsh if Joe Biden wins the election, especially in areas such as the alleged abuses against Uyghur Muslims in Xinjiang Province.
But these concerns haven’t stopped much of Tencent, whose shares have risen from $ 42 to $ 65 since March.
Alibaba’s price is up from $ 176 to $ 270, thanks in part to the upcoming stock market debut of Ant, the payments industry.
Jian Shi Cortesi, manager of GAM’s China Evolution fund, says, “When the world returns to normal after Covid-19, much of these changes will remain here. Chinese consumers will again go to London and Paris to buy global luxury brands. ‘
FundCalibre’s Darius McDermott says: “When you invest in China, you invest in a more than ten-year story where people move from villages to cities and buy things like refrigerators. In the second phase, they purchase more luxury goods. It is a trend that is likely to continue. ‘
Taking advantage of this may require patience, which is a Chinese virtue.
Alibaba and Tencent make up only 5 percent of the global stock markets. The US accounts for about 54 percent. The story may only just begin.
Popular Stocks – Ferguson
After losing about half of their value in the month to the end of March, when investors panicked over the coronavirus, shares in plumber dealer Ferguson are up an impressive 80 percent.
This is counterintuitive, not least due to its enormous dependence on the American market – where it receives 90 percent of its revenues.
Because while America has faced some of the worst virus deaths in the world, positive indicators, such as a rising number of new home permits, have increased the company’s outlook.
How the company has actually performed will be revealed on Tuesday when it releases its annual results.
Analysts have also predicted that as countries began to open up in the summer, the company and its plumbing rivals will have benefited from demand for their services.
However, attention will also be focused on what the company has done to cut costs and weather the storm – and how that affected profits.
This will affect whether Ferguson decides to reclaim the dividend, which it canceled in April due to the pandemic.
Most analysts expect it to announce a payout of around 112p per share, potentially good news.
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