The Morningstar Investment Conference takes place in London on May 15-16 this year. In the lead up to the event, Morningstar analysts are previewing their expected highlights from the two days of presentations and panel debates. We’ve already previewed expected highlights from Kames’ Phil Milburn, Investec’s Alastair Mundy and BlackRock’s Nigel Bolton. Below, Morningstar fund analyst Chetan Modi describes some of his expected highlights.
China's role in the world economy has been growing in importance and the country is now considered a significant driver of global growth. However, the sharp decline in exports during the financial crisis emphasised the importance of moving to a more balanced economic structure. In its 12th Five-Year Guideline, the Chinese administration made clear that one of its key objectives is to shift the reliance on fixed asset investment and exports towards a greater dependence on consumption. The administration is also targeting a lower growth rate (around 7%), which they believe will allow China to reduce its dependence on fixed asset investment and gradually move to a consumption-driven economy without trying to meet high growth expectations. In order to enable consumption to grow quickly, the government plans to increase household disposable income, most likely through raised minimum wages and increased social safety nets, such as healthcare and social welfare payments. The Five-Year plan also includes policies to upgrade industries and support innovation with the intention of reducing China’s dependence on exports.
With the Chinese economy at the early stages of this significant transition, Phillip Erhmann is well-placed to shed more light on this shift. Erhmann manages the Jupiter China fund with a bias towards small- and mid-caps but he also, more interestingly, focuses on companies that are innovative and moving up the value chain. These companies will arguably have a larger role to play in the Chinese economy as they look to compete globally and the country undergoes the change to a more innovative and consumption-based economy. Indeed, as growth in the developed world weakens, these companies should benefit from increased domestic demand and intra-Asian trade and it will be interesting to hear Erhmann talk about these important dynamics in the Chinese economy.
Register for the Morningstar 2012 Investment Conference here.
