Investing in China 4th July 2014
Investing in China
What we should know in this fast growing
market
1
Investing in China 4th July 2014 2
Pension fund asset allocation 10 years ago
Investing in China 4th July 2014 3
Assets Pension funds consider now
LDI Hub Liquid Markets Liquid Credit Illiquid Credit ...
Investing in China 4th July 2014 4
Shenzhen - 30 years ago
Development of China
Investing in China 4th July 2014 5
Shenzhen - Now
Development of China
Investing in China 4th July 2014 6
20 years ago
Development of China
Investing in China 4th July 2014 7
Now
Development of China
Investing in China 4th July 2014 8
Development of China
Investing in China 4th July 2014 9
Development of China
Investing in China 4th July 2014 10
Development of China
Investing in China 4th July 2014 11
Development of China
Investing in China 4th July 2014 12
Strong
Growth
Financial
Crisis
Collapse
Post
Crisis
Recovery
Recent
Underperfor
mance
...
Investing in China 4th July 2014 13
I skate to where the
puck is going to be, not
where it has been.
Wayne Gretzky
Opportu...
Investing in China 4th July 2014 14
Percentage of Order Adults (Age 65+) in China
• Far less mature industry than develope...
Investing in China 4th July 2014 15
• Serious environmental degradation driven by
economic development
• Strong government...
Investing in China 4th July 2014 16
• Government Investment: Biotech, energy
saving, environmental protection, high-end
ma...
Investing in China 4th July 2014 17
“Internet will change
people’s life”
1999 Jack Ma –
Founder of Alibaba Group
Technolog...
Investing in China 4th July 2014 18
E-commerce company,
founded in 1999
Handled 1.1 Trillian Yuan in
sales in 2012
Estimat...
Investing in China 4th July 2014 19
Technological Change
Investing in China 4th July 2014 20
“take a human desire, preferably one that has
been around for a really long time. Iden...
Investing in China 4th July 2014 21
Technological Change
1 – Eliminating steps
Investing in China 4th July 2014 22
Technological Change
1 – Eliminating steps
Investing in China 4th July 2014 23
Technological Change
1 – Eliminating steps
Investing in China 4th July 2014 24
Who stole my
cheese??
Technological Change
2 – Cross Sector Competition
Investing in China 4th July 2014 2525
MACHINERY LABOUR
CAPITALLAND
Intellectual property
Patents
Brand
New Technology
Data...
Investing in China 4th July 2014 26
Technological Change
4 – Innovate or Die
Investing in China 4th July 2014 27
QQ Online
Game
QQ Blog
Webmail
QQ Mobile
App, Expand
Value Added
Services
Mobile IM
We...
Investing in China 4th July 2014 28
Customer
First
Team Work
Integrity
Embrace
Change
Passion Commitment
Technological Cha...
Investing in China 4th July 2014 29
Technological Change
5 – Distinction and uniqueness, not just scale
Investing in China 4th July 2014 30
Type of
Investment
Domestic/Non-
Domestic
Currency Additional
Information
A Share Dome...
Investing in China 4th July 2014 31
• Less capacity to access the market for foreign investors
• Lack of transparency
• La...
Investing in China 4th July 2014 32
• Fast growing market
• More open to the world
• Opportunities include
 Health Care
...
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Investing in China - What we should know in this fast growing market

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The development of China and ways to access the Chinese market.

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Investing in China - What we should know in this fast growing market

  1. 1. Investing in China 4th July 2014 Investing in China What we should know in this fast growing market 1
  2. 2. Investing in China 4th July 2014 2 Pension fund asset allocation 10 years ago
  3. 3. Investing in China 4th July 2014 3 Assets Pension funds consider now LDI Hub Liquid Markets Liquid Credit Illiquid Credit Illiquid Markets Collateral Mgt. Equities (EM, DM) Sterling Credit (IG) Structured Finance Reinsurance Pooled vs. Seg DGFs Global Credit (IG) Infrastructure Debt Private Equity Leverage & Liquidity Style Premia HY/Loans Senior Direct Lending Infrastructure Overlay Strategies Risk Parity ABS Mezzanine Finance Real Estate CTA Emerging Market Debt Distressed Debt Global Macro Absolute Return Bonds Senior CRE Debt Equity Long-Short Total Return Sub-IG Credit Relative Value
  4. 4. Investing in China 4th July 2014 4 Shenzhen - 30 years ago Development of China
  5. 5. Investing in China 4th July 2014 5 Shenzhen - Now Development of China
  6. 6. Investing in China 4th July 2014 6 20 years ago Development of China
  7. 7. Investing in China 4th July 2014 7 Now Development of China
  8. 8. Investing in China 4th July 2014 8 Development of China
  9. 9. Investing in China 4th July 2014 9 Development of China
  10. 10. Investing in China 4th July 2014 10 Development of China
  11. 11. Investing in China 4th July 2014 11 Development of China
  12. 12. Investing in China 4th July 2014 12 Strong Growth Financial Crisis Collapse Post Crisis Recovery Recent Underperfor mance Stock Market Performance
  13. 13. Investing in China 4th July 2014 13 I skate to where the puck is going to be, not where it has been. Wayne Gretzky Opportunities
  14. 14. Investing in China 4th July 2014 14 Percentage of Order Adults (Age 65+) in China • Far less mature industry than developed countries • Demographic change and aging population • Rising income and affordability • Healthcare reform • Healthcare awareness Opportunities Healthcare
  15. 15. Investing in China 4th July 2014 15 • Serious environmental degradation driven by economic development • Strong government support • Clean China over the next 5 years • Higher desire for clean energy Opportunities Environmental Protection
  16. 16. Investing in China 4th July 2014 16 • Government Investment: Biotech, energy saving, environmental protection, high-end manufacturing • Internet Penetration Opportunities Technology
  17. 17. Investing in China 4th July 2014 17 “Internet will change people’s life” 1999 Jack Ma – Founder of Alibaba Group Technological Change
  18. 18. Investing in China 4th July 2014 18 E-commerce company, founded in 1999 Handled 1.1 Trillian Yuan in sales in 2012 Estimated market value $120 billion Instant/mobile messenger, founded in 1998 850 million monthly active users Market value $150 billion Search engine, founded in 2000 Handling 5 billion search queries per day Market value $65 billion Technological Change
  19. 19. Investing in China 4th July 2014 19 Technological Change
  20. 20. Investing in China 4th July 2014 20 “take a human desire, preferably one that has been around for a really long time. Identify that desire and use modern technology to take out steps.” Evan Williams – Co-Founder of Twitter Technological Change 1 – Eliminating steps
  21. 21. Investing in China 4th July 2014 21 Technological Change 1 – Eliminating steps
  22. 22. Investing in China 4th July 2014 22 Technological Change 1 – Eliminating steps
  23. 23. Investing in China 4th July 2014 23 Technological Change 1 – Eliminating steps
  24. 24. Investing in China 4th July 2014 24 Who stole my cheese?? Technological Change 2 – Cross Sector Competition
  25. 25. Investing in China 4th July 2014 2525 MACHINERY LABOUR CAPITALLAND Intellectual property Patents Brand New Technology Data User Platform Goodwill Customer Base Human Capital I n t a n g i b l e s T a n g i b l e s Technological Change 3 – Recognition of Intangible Assets
  26. 26. Investing in China 4th July 2014 26 Technological Change 4 – Innovate or Die
  27. 27. Investing in China 4th July 2014 27 QQ Online Game QQ Blog Webmail QQ Mobile App, Expand Value Added Services Mobile IM Wechat Launched Mobile Social Media Apps for taxi/flight booking Mobile Payment Platform Technological Change 4 – Innovate or Die
  28. 28. Investing in China 4th July 2014 28 Customer First Team Work Integrity Embrace Change Passion Commitment Technological Change 5 – Distinction and uniqueness, not just scale
  29. 29. Investing in China 4th July 2014 29 Technological Change 5 – Distinction and uniqueness, not just scale
  30. 30. Investing in China 4th July 2014 30 Type of Investment Domestic/Non- Domestic Currency Additional Information A Share Domestic RMB QFII license required B Share Non-Domestic USD H Share Non-Domestic HKD Other share classes traded on foreign stock exchange Non-Domestic Currencies in local stock market e.g. NYSE, NASDAQ, Singapore Indirect Investment Non-Domestic Currencies in local stock market Shares of companies in developed countries which have significant business operation in China Ways to access Chinese market
  31. 31. Investing in China 4th July 2014 31 • Less capacity to access the market for foreign investors • Lack of transparency • Lack of using derivatives for hedging and portfolio replication • Demographic shift • Political risk • Increased concerns of credit growth • Property bubble • Perceived slowdown in growth Limitation and Risk
  32. 32. Investing in China 4th July 2014 32 • Fast growing market • More open to the world • Opportunities include  Health Care  Environmental Protection  Technology • Technological Change  Positive to technology sector and those which use technology in the right way  Winners  Meet human desire (take out steps)  Innovate  Monetise intangible assets  Unique and distinct market position  Negative Impact  Some traditional sectors, e.g. retailers, sales agents, intermediaries  Business impacted by cross-sector competition Summary

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