Virginie Maisonneuve, Head of Global and International Equities
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For professional investors and advisers only. This document is not suitable for retail clients.
Why is this so important?
This leadership team could be the last of its kind. The new leader, Xi Jing Ping, is still in the vein of Deng Xiao Ping who led China towards a market economy in the eighties, but he could potentially be steering China towards a new leadership style.
So far, Xi Jing Ping has kept a relatively low profile in the international community. He has also been quiet about his vision for the economic direction of the country. The son of a communist veteran, he has degrees in chemical engineering and political science and has held various roles in Fujian and Zhejiang provinces. He was given the delicate role of Shanghai Party chief after the fall out of Chen Liangyu after the social security fund scandal. He is known for his stance against corruption, his pragmatism and his diplomacy, which will be very much needed in the upcoming leadership team.
The departing leadership team has been under pressure from the global financial crisis and the limited scope for substantial measures to support the economy. The new team under Xi Jing Ping will therefore have greater room to take decisive action to boost growth, most likely after March 2013 when the team officially takes over the country from an economic standpoint.
Policy implications
The priorities post-transition will likely be continued financial reforms, pricing reforms – in areas such as gas, oil and power – state-owned sector reforms with a potential transfer of assets from companies in difficulty, and fiscal and tax reforms. The need for more housing and “acceptable” property prices may bring welcome land supply reforms which would impact developers and construction companies as well as commodities. Finally, a focus on urbanisation could continue to be a driver for growth for many years to come.
Chinese- or Hong Kong- listed securities are not the only way to tap into Chinese economic growth. Investors can benefit from streams of earnings in global and local companies, wherever they are listed. Although growth has slowed, and probably for the best, it still compares favourably to the rest of the world. Some of the best ways to play the on-going changes in Chinese society and growth opportunities are in the insurance, consumer and selected commodities areas.
Important Information:
For professional investors and advisers only. This document is not suitable for retail clients.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Schroders has expressed its own views and opinions in this document and these may change. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.
Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA, which is authorised and regulated by the Financial Services Authority.
Source: ETFWorld – Schroders Quickview
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