Citywire A-rated manager Mansfield Mok has named two technology-focused stocks he is tracking as he seeks to capitalise on firms achieving increased growth through exports.
Mok, who runs the New Capital China Equity fund, said he had identified firms adjusting to the consumption-led growth story but still able to tap international markets.
Speaking to Citywire Global, Mok said: ‘We are looking at companies which are showing the ability and willingness to change to meet the market conditions.’
‘This can mean companies repositioning themselves and, in some cases, moving further down the value chain but also finding new areas of growth.’
While the likes of Alibaba and Tencent Holdings have dominated international investors’ interests, Mok named two tech stocks which have repositioned themselves to expand globally.
For example, Mok, who joined EFGAM from GAM in May 2012, said the development of 4G technology in China would provide a boon for many technology companies, both inside and outside of the country.
‘Huawei is a telecoms equipment market which benefits from the Chinese government’s strategic move to establish a 4G standard. It has become a leader in this field, in both cost and technology, while also able to export high-end products overseas.’
Beyond PC player
In a similar vein, Mok pointed to software and computing company Lenovo as one of the stocks which was shifting from a domestic-focused company to reflect the wider internationalisation of Chinese industry.
‘Lenovo has turned itself from a low-cost OEM manufacturer and is now a ‘Chinese brand’. It started as a manufacturing company and it has now moved to outsource this process to Taiwanese companies to lower their costs.’
‘They have increasingly put more emphasis on their brand, marketing and design. They have become more international rather than just a Chinese PC company. This is while its strong domestic market has served as a base to allow it to expand overseas to other market, such as Japan and Germany.’
IT stocks as a whole make up 14.6% of Mok’s $169 million fund at present. This is behind industrials (27%) and financials (33.6%), which is largely comprised of non-banking stocks.
This is apparent in the fund’s top 10 holdings, which include two insurance focused companies, New China Life Insurance (6.1%) and China Taiping Insurance Holdings (4.75%).
The New Capital China Equity USD Ord Acc returned 39% in US dollar terms since its launch in August 2012. This is while its benchmark, the MSCI Zhong Hua TR USD, rose 27.2% over the same 25 month period.