Manulife: Chinese consumer spend spreading in Asia

Added 25th May 2016

The firm is buying “regional champions” with revenues driven by Chinese millennials, who are impacting consumer demand in Asia, said Ronald Chan, Manulife Asset Management's chief investment officer of Asia ex-Japan equities.

Manulife: Chinese consumer spend spreading in Asia

Chan said specific multinationals, particularly in South Korea and Taiwan, will continue to benefit from Chinese milennial consumers, which he believes is a consumer segment with rising importance in Asia.

“We have been finding companies that are multinational and listed in Asia. They have a significant global market share with a high [marketshare] in the sectors they operate in,” Chan said in a briefing on Thursday.

He would not provide specific company investments. But the Manulife Asian Equity Fund, for example, has nearly 60% exposure to the TMT sector (33%) and consumer sector (25%), according to FE data. Samsung, Tencent and China Mobile are among the fund's top ten holdings.

Companies to target are the ones that can identify the new Asian growth landscape. South Korea and Taiwan have a strong cultural influence on Chinese millenials, he said. Product design and innovation as well as brand building play a key role in capturing this segment. 

Smartphones and personal consumer items such as cosmetics and fashion are linked to Chinese millennials.

Chan believed there are unexplored opportunities driven by the demand led by this generational group, which is one of the core themes that influence portfolio allocation, he said.

As China transitions from an export-led economy to one based on consumption, demand will increase. “Even the Chinese government is talking about changes in tax policies on cross-border trade.”

Another key investment theme is Asia's ageing society. Chan has identified some Hong Kong-listed phramaceutical firms that target the onshore healthcare market, as well as some South Korean firms that use advanced technology to manufacture drugs at reduced cost.

He added that Asian equities are “undervalued and under-owned.

"We’re seeing improvements in investor confidence as fiscal and monetary stimulus measures from Asia’s central banks start to flow through into the real economy. North Asia, and South Korea in particular, is best positioned to capture the opportunities."

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