Overseas listed China stocks: the cream of the crop
GF Fund Management Co., Ltd. (GF Fund) was established in 2003 and had over $24 billion in assets under management as of the end of 2013. It serves over 8 million retail investors as well as major institutional clients in China in the form of mutual funds and segregated accounts. It manages over 100 strategies spanning domestic equity, fixed income, asset allocation and overseas securities through QDII products. It consistently delivers outstanding risk-adjusted return to investors via actively managed strategies as well as stable return via balanced strategies.
GF International Investment Management (GFIIM), incorporated in Hong Kong and licensed by the Securities and Futures Commission, is a wholly owned subsidiary of GF Fund. GFIIM offers complete Greater China investment services and solutions, including domestic equity and fixed income securities under the RQFII and QFII regimes, and offshore private funds investing in overseas listed China equities.
The company is committed to growing its product suites in anticipation of the emerging demand for investment in the domestic A-share market as a result of the potential inclusion of A-shares in major global indexes. It is positioned to build itself as a China expert to serve global clients.
In the past few years, China’s economy has gone through tremendous structural changes. The third Plenum set a clear direction of reform for transitioning from the exports- and investment-led growth model to a consumption-based, self-sustaining economy. Among other things, interest rate reform, capital account liberalization and equity market reform bode well for a more favourable environment for foreign investors to increasingly participate in the development of the domestic economy.
Companies in the new emerging industries have stood out in scale and growth. Companies with growth potential and quality corporate governance have chosen to list overseas, mainly in Hong Kong and the US, as an alternative to the domestic market given the breadth and depth of investor bases in these developed markets.
So far, most of the blue-chip China TMT stocks are listed in Hong Kong and the US markets, including familiar names such as Tencent, Baidu and Ctrip. Recently, Alibaba embarked on listing in the US. As the biggest e-commerce powerhouse in China, Alibaba is expected to be comparable with Facebook in terms of fund-raising size.
In addition to TMT stocks, a great number of companies which benefit from the new policy directions and will capture the emerging growth potential are listed in the US and Hong Kong. For instance, companies engaged in the healthcare, new energy and consumer discretionary sectors are positioned to tap into the rising middle class and the secular trend of urbanization.
As such, investing in overseas listed China stocks provides unique access to the growth of the world's second largest economy with reasonable pricing as well as credible corporate governance.
Tom Ding, the portfolio manager of the Guangfa Asia Pacific ex-Japan Selective Fund, has over 10 years industry experience. He took over the fund in April 2012. The fund delivered a 19% return in 2012 and 43.43% last year. Ding adopts a combination of top-down and bottom-up approaches. He focuses on identifying industries with higher growth than GDP growth.
Within the high-growth industries, Ding picks reasonably priced blue chip stocks with sustainable growth potential for the next two to three years. Additionally, he carries zero tolerance to corporate governance malpractice. Senior management consistency, honesty, protection of minority shareholders and organic growth constitute key elements in his consideration.
He continues to hold a bullish view on overseas listed China stocks as he believes many of them are high-quality companies that capture China’s epic growth as well as leverage the strong capital inflows of the developing economy. To facilitate access for overseas professional investors, Ding also runs a Cayman Island-domiciled fund, one of GFIIM’s flagship products.
Contact
GF Fund Management Co., Ltd.
Sales and Marketing Department
Liu Min
Tel:+8620 8918 8609
Email: [email protected]
Website: www.gffunds.com.cn
GF International Investment Management Limited
Director, Head of Institutional Sales
Sharon Yang, Ph.D
Tel:+852 3695 2807
Email: [email protected]
Website: www.gffunds.com.hk