The e-commerce sector will continue to provide valuable opportunities to investors, given China’s focus on developing its new economy.
That’s the view of Thomas Kwan, head of fixed income, who leads the investment management and research platform at Harvest Global Investments, which includes fixed income, Greater China equity, Asian equity, ETFs and asset allocation.
He told Citywire Asia that China has been encouraging new economy-related companies to grow, which include sectors like the internet, financial technology and financial protection. It is also focusing on structural reforms of state-owned enterprises.
‘People’s life in China has been involved with internet applications all the time,’ Kwan said. ‘So the use of technology applications in everyday life is much more extensive in China compared to the rest of the world.
‘If you look at some internet and technology firms, they are very different from how they used to be. Right now, we actually have problems classifying internet companies because they are not really pure internet firms anymore.’
Kwan said many years ago, if one was to look at Tencent, it was an internet company, but now it is a media firm; while in the case of Alibaba, it is now more of a distribution channel.
When asked why he is still interested in Tencent -- as it has been quite expensive in recent years -- Kwan said that the valuations in the emerging markets equities, including China, are still cheap compared to its own history, in general.
‘More importantly, Tencent has been expensive for the past three years, but the firm continues to deliver. That’s why, even today, it is one the of the best performing large-cap stocks.
‘I think the question is whether its price will affect the firm's growth and whether it will continue to grow -- that’s more important than anything else.’