Lo said as China takes measures to shift the country to a consumption-oriented economy, it will create opportunities in consumption, internet and services as well as insurance sectors.
“As China works through its reform agenda, the initial and obvious opportunities around broader sectors and themes will make way for more discerning stock selection to drive longer-term returns,” Lo said in her outlook report.
Going into 2015, policy and governmental support will also continue to favor healthcare, environmental protection and clean energy related industries, Lo said in her outlook report, adding that the fund house is also looking into nuclear energy related companies.
“Whilst the broader macro and policy-driven environment brings up interesting investment themes and ideas, our focus remains on taking a disciplined approach to active investing and selecting quality businesses with strong fundamentals,” she said.
The manager finds contrarian ideas in ’new economy’ companies interesting. These include gaming and e-commerce players as well as internet and media companies that continue to generate strong growth, with some even showing strong global ambition.
Meanwhile, she highlighted that the risk in the shadow banking system has not subsided and a pick up in non-performing loans and bankruptcies are still potentially likely. But, the manager doesn’t expect this to lead to a widespread systematic risk event.
Reflecting her positive views on China’s longer-term consumption theme, the manager said she has placed an emphasis on investing in new economy companies as well as in consumer and services-related industries over the last two years.
Lo manages Schroder ISF Greater China, Schroder ISF Emerging Asia, Schroder ISF Taiwanese Equity and Schroder ISF China Opportunities.
A look at the two-year performance of Schroder ISF China Opportunities and Schroder ISF Greater China compared to their respective benchmarks:
