Emerging phenomena in China. Our platform highlights them.
In the dynamic landscape of global investments, Carmignac experts are keenly focusing on China's key growth sectors, aiming to capitalise on the country's digitalisation, consumer boom, environmental technology, and healthcare advancements.
The digitalisation and technology sector is a significant area of interest for Carmignac, with a 20.8% equity allocation in their Emerging Markets funds. Companies like Taiwan Semiconductor Manufacturing and SK Hynix, pivotal players in the tech supply chain supporting digitalisation trends in Asia, including China, are key investments.
The rise of the Chinese middle class is another trend that Carmignac is capitalising on. With a 26% allocation to Consumer Discretionary stocks, the funds are positioned to benefit from rising disposable incomes and consumer spending in emerging markets, including China. VIPSHOP Holdings, an online discount retailer in China, is a prime example of this consumer trend in their top holdings.
Environmental technology and utilities are also strategic sectors for Carmignac, with around 7.9% allocated to Utilities and 1.4% to Materials sectors. This exposure encompasses companies involved in environmental solutions, energy efficiency, and sustainable resources. Centrais Eletricas Brasileiras, a Brazilian electric utility company, is among the top holdings, demonstrating the fund’s commitment to environmentally focused businesses in emerging markets.
Healthcare is a smaller but strategic sector, with about 3.2% allocation in Carmignac’s Emerging Markets portfolios. This reflects investment in companies involved in medical services and healthcare products to capture long-term demographic and health trends in Asia, including China.
China, with a population of 1.4 billion and a per capita GDP of over $10,000, is one of the world's largest consumer markets. The expansion of innovation capabilities in China's healthcare and medical sector is likely to provide further growth potential. The Chinese BATX (Baidu, Alibaba, Tencent, and Xiaomi) are challenging the dominance of US tech giants FAANMG, and many Chinese pharmaceutical companies are increasing their investments in research and development in the biotechnology sector.
Private telemedicine platforms in China have proven their effectiveness during the pandemic and experienced rapid growth. Companies like Chongqing Zhifei Biological, a vaccine provider, and ENN Energy, one of the largest private energy conglomerates in China, are focus areas for the Chinese government's transition to environmentally friendly technologies.
China's latest five-year plan aims to expand the domestic market to boost consumption, and the country aims to achieve technological independence within 5 to 15 years. The Chinese healthcare and medical sector is emerging as an innovator, largely due to the "China Care" program. The country's market capitalization is $19 trillion, making it the second-largest economy in the world.
In conclusion, Carmignac experts prioritise diversification across Asian emerging market themes, including China’s digital tech development, expanding consumer base, environmental sustainability initiatives, and healthcare improvements. They select high-quality, sustainably profitable companies often with small- and mid-cap focus to unlock hidden growth opportunities in the Asian emerging markets, including China.
In the context of picking high-quality companies for their Emerging Markets funds, Carmignac also prioritizes investment in the other technology sector, such as the telemedicine platforms in China that have grown rapidly during the pandemic.
Reflecting China's commitment to environmental sustainability, Carmignac also invests in companies like ENN Energy, one of the largest private energy conglomerates in China, that are focus areas for the government's transition to environmentally friendly technologies.
