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Authored by Bob Brewis, investment manager at Aubrey Capital Management, a specialist global manager founded in 2006 with offices in Edinburgh and London.
A year ago, we dared to suggest that a lot of the bad news in China was in the price and some of the business regulation headwinds were alleviating. We did not, however, foresee the draconian zero Covid policy which sucked the life out of the Chinese economy, reaching a climax expressed in civil disorder not seen since 1989. So far, the result of these protests has, thankfully, been very different this time.
China has had other issues to worry about too: the demise of over-leveraged property developers and the collapse of housing starts; problematic relations with the U.S. culminating in the highly restrictive semiconductor rules; even exports which have been the bright spot in recent years, but now face a slowing world economy.
But we invest in the Chinese consumer: will he/she be released to spend the massive savings hoarded up in the past few years? We believe so, and this will be a much more favourable backdrop for our consumer companies who are now very cheaply valued.
About India, our predictions proved more accurate. Despite its strength in 2021, it proved very resilient this year too. The spike in oil came and went and India survived as we thought it would. Like much of the emerging world, inflation picked up a little, but much less dramatically than the developed world, an...................... To view our full article Click here
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