Fidelity launches China Consumer Fund
• First fund in Hong Kong to directly target Greater China’s consumer growth trends
• Gives investors access to companies selling goods and services to China’s consumers
Hong Kong, 6 April 2011 – Fidelity International today launched its new Fidelity Funds - China Consumer Fund (the FF - China Consumer Fund), the first of its kind in Hong Kong that gives investors direct access to companies likely to benefit from China’s unprecedented domestic consumption boom.
Managed by portfolio manager Raymond Ma, the FF - China Consumer Fund directly invests in equities of Greater China companies developing, manufacturing or selling goods or services for Chinese consumers. The fund is available to Hong Kong investors from today, available through major banks and insurance companies.
“China is on the brink of a new phase of consumer development that the world has never seen before,” said Raymond Ma, Portfolio Manager of the fund. “The foundations for a quantum leap in the volume and quality of consumption are now in place in China. There are pro-consumption government policies, strong productivity and income growth, an under-penetration of consumer goods and services, upgrades in the quality of consumption, and robust urbanization. All of these factors will lead to China shaking off its dependence on Western demand and fuelling its own transformation into a developed economy with a mature, robust, self-sustained consumer base.”
“China is now at the point that Japan reached in the late 1960s and Korea reached in the late 1980s,” he explained. “The last ten years in China have been a golden age of manufacturing and investment-led growth. The next ten will be an age of consumer-led growth. Domestic consumer spending as a percentage of GDP should skyrocket over the next few decades and China’s growing affluent middle class and increasingly urbanized provinces should propel a new set of opportunities as well as winners. The China Consumer Fund aims to build value from this fundamental thesis.”
Raymond explained that Chinese wages and domestic demand will continue to grow strongly over the next five to ten years, further stimulating this consumer boom.
“In the 12th Five Year Plan, the government has started to address income inequality by promoting wage growth so the national average wage could double over the next seven years,” he explained. “Single-child beneficiaries of the single-child policy who have reached their 20s enriched by their parents’ savings are now ready to spend. And with China’s rising middle class ready and able to pay for a better quality of life, branded goods and luxury items could be especially popular. Many of these drivers are being captured by a new breed of Chinese small-cap businesses that have grown into mid-cap national champions over the past decade, and are set to become global leaders in the future.”
Raymond believes China’s population is in fact still underserviced and underpenetrated in the consumer goods sector which will create significant growth opportunities for the right companies.
“By most international benchmarks, despite the immense strides of the past few decades, China is still underpenetrated by consumer goods. As the economy rebalances and becomes more and more focused on reducing this consumption deficit, China’s growth is likely to become even more stable and autonomous, giving an earnings potential unlike anything seen in the West. A number of companies will significantly benefit from this trend and the FF - China Consumer Fund aims to identify and capture these investment opportunities.”
The FF - China Consumer Fund’s investment proposition has five pillars that are supporting strong consumption growth and altering consumption patterns in China:
• The government’s pro-consumption policies – Wage improvements plus tax benefits and subsidies, with greater social security
• China’s robust economic growth and rising income levels – wages rising from a low base and forecast to double within seven years
• Current under-penetration of consumer goods and services – China is still vastly underpenetrated compared to most world markets
• Consumption upgrade – Chinese spending shift to increasingly higher-end goods and services
• Urbanisation – Fostering wealth redistribution and upgrading provincial areas
The Fund sets out to create a portfolio of 80-120 stocks in China, Hong Kong and Taiwan and an average holding period for each stock of 12-18 months. Stock selection is based on fundamental, bottom-up research, leveraging Fidelity International’s global network and research. The performance benchmark for the fund is the MSCI China Index NR.
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About Fidelity International
Fidelity International provides investment products and services to individuals and institutions in the UK, continental Europe, the Middle East and Asia Pacific. Established in 1969, the company has over 5,400 staff in 23 countries and manages or administers client assets US$309.7 billion as at 31 March 2011. Fidelity has over 7 million customer holdings and manages more than 750 equity, fixed income, property and asset allocation funds. Fidelity’s fund managers receive research from one of the largest proprietary research teams, covering 99% of the world’s largest listed companies. Fidelity International is an independent company which is privately owned.
Tel: 852 2629 2800
Tel: 852 2629 2800