UBS sees Chi­nese go­ing-global groups as good in­vest­ments

China Daily (USA) - - BUSINESS - ByWUYIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

China’s com­pa­nies with go­ing-global strate­gies are likely to present good in­vest­ment op­por­tu­ni­ties and will be one of the ma­jor in­vest­ment themes in the sec­ond half of 2016, ac­cord­ing to Gao Ting, head of China strat­egy at UBS Se­cu­ri­ties.

Shar­ing his out­look for the sec­ond half of 2016 on Wed­nes­day, Gao said: “Gen­er­ally speak­ing for­eign in­vest­ments in China and China’s in­vest­ments in other coun­tries are at a sim­i­lar level, which shows that the size of China’s overseas in­vest­ments is get­ting greater.”

Dif­fer­ing from pre­vi­ous in­vest­ments of Chi­nese en­ter­prises that fo­cused on re­sources and en­er­gies, re­cent pro­grams by pri­vate en­ter­prises mainly fo­cus on con­sump­tion-driven sec­tors, such as tourism, which will meet the de­mands of fast-grow­ing num­bers of out­bound tourists. They also now em­pha­size in­ter­net-based tech­nolo­gies with a great num­ber of do­mes­tic users, ac­cord­ing to re­search data of UBS Se­cu­ri­ties.

Dis­clo­sure of in­for­ma­tion from A-share listed com­pa­nies shows that the com­bined size of their out­bound in­vest­ments through merg­ers or ac­qui­si­tions in the first half of 2016 has sur­passed that of all of 2015 in many sec­tors, in­clud­ing health­care, phar­ma­ceu­ti­cals, en­ter­tain­ment and elec­tri­cal home ap­pli­ances, ac­cord­ing to data from Shang­haibased Wind In­for­ma­tion Co Ltd, a fi­nan­cial in­for­ma­tion ser­vices provider.

“The point of th­ese go­ing-global pro­grams, be they through merg­ers, ac­qui­si­tions or other vehicles, is to meet the en­ter­prises’ de­mands in the do­mes­tic mar­ket, which will have pos­i­tive ef­fects on th­ese com­pa­nies’ longterm devel­op­ment,” said Gao.

An­other two ma­jor themes for in­vest­ment are in­fra­struc­ture and the large-and-medium-cap en­ter­prises that will ben­e­fit from the Shen­zhenHong Kong Stock Con­nect when it starts run­ning in the sec­ond half of 2016.

The point of th­ese go­ing-global pro­grams ... is to meet the en­ter­prises’ de­mands in the do­mes­tic mar­ket.” head of China strat­egy at UBS Se­cu­ri­ties

Gao Ting,

Gaoalso said in­vest­ment op­por­tu­ni­ties may emerge in three sec­tors, namely elec­tri­cal home ap­pli­ances, foods and bev­er­ages, and bio­phar­ma­ceu­ti­cals.

The elec­tronic home ap­pli­ances and food and bev­er­age sec­tors have shown “turn­ing points” in terms of sales rev­enue amid re­cov­er­ing mar­ket con­sump­tion of th­ese prod­ucts. The steadily grow­ing phar­ma­ceu­ti­cal sec­tor will at­tract more cap­i­tal in the long run and will win in­vestors’ op­ti­mistic sen­ti­ments, he said.

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