Video blog with Shadow Lau

After a strong run for the MSCI China in four consecutive months, the stock market gave up some of its gains in February. The reason for such pullback is PBOC’s unexpected issuance of repurchase agreements after the Chinese New Year holiday, which is a normal practice. But since the macro data were listed in January and February continue to show moderate economic recovery; in our view the reason for that pullback is heavy because the MSCI China went up by almost 30 per cent since September 2012. 

China just ended the National People's Congress (NPC) in March the government sets the GDP target of 7.5 per cent for 2013, which is in line with our expectations. We believe that the new Chinese government will continue to drive economic growth by 3Rs, that is Rebalancing the household income growth in coastal and inland area, Redeveloping the economic growth in the western and eastern area that is speeding up the urbanisation, and Reforms as the Chinese government needs to provide reform to solve some of the hurdles that are blocking this progress. So these are the forces that support China on sustainable growth.

There are more noises in the market and great volatility in the performance. The key themes that dominate our China portfolios are consumption, urbanisation and environmental protection. One third of our holdings are in the theme of consumption, one third is in the theme of urbanisation while the rest is in the theme of environmental protection, as we believe that these sectors have a multi-year story in China. So we expect the niche players in these sectors will enjoy securer earnings growth that drives promising returns in the long run despite noises in the stock market from time to time.