‘U.S., rather than China, is where the action is’
CHINA is where all the investment action is, right? Well, not entirely, and at least one South African asset manager leans increasingly towards another “emerging market” — the U.S.
Chris Botha, senior fund manager at Johannesburg-based Imara Asset Management South Africa, believes that over the next 25 years, the U.S has the potential to emerge as a much more vibrant economy on the back of massive oil and gas discoveries and product innovation by U.S. corporates.
“Some developments that will play out over the next two decades are heavily in favour of the U.S. For instance, its so-called rust belt, once the home of aging heavy in- dustry, is being revitalised, thanks to new energy sources.
“China may have to settle for being the number-two economic superpower for much longer than once thought,” says Botha.
The discovery and exploitation of substantial shale gas deposits are not the only factors that could lower U.S. energy costs. U.S. investment in renewables has been rising and may pay off. “The im- pact of U.S. energy self-sufficiency will be considerable. Petro-dollars will stay in the U.S., contributing to a stronger dollar,” says Botha.
He thinks a new wave of technology innovation by major U.S. companies will also contribute to a resurgence.
“Chinese growth will continue, but challenges can be expected as it tries to manage the transition to a consumer economy. The longterm implications of China’s onebaby policy will also have to be addressed.”
American consumer goods companies are well-placed to take advantage of the growing appetite for consumer brands, he said.