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Atlantis IM bets on China’s healthcare, banks

The healthcare and banking sectors will lead China equity returns in 2018, according to Liu Yang, chairwoman of boutique fund house Atlantis Investment Management.
Atlantis IM bets on China's healthcare, banks
Liu Yang, Atlantis Investment Management

Defining herself as a trend investor with a primary focus on cyclical and trend analysis, Liu said she was bullish on China’s healthcare and banking sector in 2018.

“Last year, it was a big year for insurance while the rally will be moving on to banks, healthcare and consumer staples this year,” she said in a panel at the Bloomberg Invest Forum. “This year will be a big year for China’s insurers and healthcare companies.”

The boutique asset management firm, which Liu oversees, now manages four Ucits funds: the Asian Fund, the China Fund, the China Healthcare Fund and the Japan Opportunities Fund, according to FE.

The healthcare sector, which stands to benefit from the improvement of living standards of China’s population, is the major overweight in the funds her firm manages.

Liu is also bullish on China’s banking sector, which will likely benefit from the further opening up of the country’s financial markets.

“China’s banks have not been outperforming, in general, for many years,” she said. “In addition, they have not been rerated for a long while.”

“The prime reason for an overweighting position is that the banking sector now manages to recruit young, dynamic talent,” said Liu. She added that on the profitability front, the net interest margin of these banks recorded a double-digit growth in 2017.

Top holdings Tencent

Tencent is currently the top holding on an aggregate level in Liu’s investment management firm.

She said that a partial sell-off by the tech giant’s second largest stakeholder earlier this month would not affect her overall outlook for the company. Instead, she has added to her investment when the stock price dipped slightly during the sell-off period.

“The sell-off does not negatively impact the fundamental strength in Tencent, which I observe has been incorporated well into the lifestyle of Chinese millennials,” Liu said.

“The platform Tencent created in nature has been a combination of a social media, a search engine and more. More impressively, it continues to deliver surprises, beating analysts’ estimation of quarterly profits, having posted a net income of RMB 20bn in the recent quarter.”

Liu also said that Atlantis IM is planning to launch two products for its institutional clients. One is an index fund investing in opportunities across China’s Greater Bay region, which is Beijing’s project to drive economic growth in the vicinity of Hong Kong, Guangdong and Shenzhen. Another fund to be launched is a private equity product investing in healthcare-linked companies globally.


Atlantis China fund versus category average and its benchmark MSCI China Index

Source: FE. Fund NAV is converted to US dollar for comparison purposes. The funds are sold to institutional investors only.

Part of the Mark Allen Group.