Investment Insights 

First State Stewart Asia - China Equities Update

July 2019

Trade tensions have continued to rattle the market, as negotiations between China and the US remain mired in strife. The bilateral trade account and the extent of China’s willingness to open up its domestic market are among the primary areas of contention, along with accusations of forced technology transfers and lack of protection on intellectual property rights.

Tapping into a broader range of investment opportunities as china market opens up

November 2018

The China equity market includes a myriad of share classes, each with distinct characteristics. ‘Offshore’ Chinese equities are listed on overseas stock exchanges such as New York and Hong Kong and denominated in foreign currencies, while ‘onshore’ Chinese equities are listed on the Shanghai and Shenzhen Stock Exchanges and denominated in RMB.

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First State Stewart Asia - China Equities Update

July 2018

It has been 40 years since Mr Deng Xiaoping embarked on his ambitious market-based reform program and began to open up China’s economy. Since then, China has been transformed; while there have been stops and starts on the way, China was one of the fastest-growing countries in the world over the past four decades, averaging 10% growth a year.

We have been following the reforms closely. Since 2015, two-thirds of China’s central state-owned enterprises (SOEs) have been restructured, listed or have introduced some kind of shareholder reform. Stronger SOEs have swallowed up weaker ones, non-performing assets have been sold and inefficient ‘zombie enterprises’ – those that have been loss-making for years – have been allowed to go out of business.

We believe SOE reform is an important step towards improving shareholder returns in the Chinese equity market. Some of the largest contributors to performance in our China portfolios are companies that have adopted market-based practices, such as Wanhua Chemical, Gree Electric and CSPC Pharmaceutical, which we highlight in the attached update. We also note a few of the more recent SOE restructurings and our expectations for these companies.

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First State Stewart Asia - China and Greater China Equities Update

October 2017

Reforms in the state-owned sector – supply-side reforms, sector consolidation and mixed ownership initiatives – have helped China manage its slowing economy and avoid a painful “hard landing” amid a global contraction.

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First State Stewart Asia - China and Greater China Equities Update

July 2016

In this update, we highlight some of the key areas that investors should be aware of when investing in China’s state-owned sector and a brief history of China’s state-owned enterprise reforms.

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