Barings’ Khiem Do believes China’s property sector presents one of the country’s best investment opportunities despite growing concerns of a bubble.
Head of Asia multi-asset Do says although pockets of price bubbles exist in luxury property sectors such as Shanghai, Beijing or Guangdong, a national bubble is unlikely to develop.
Instead, Do believes household wealth increases mean people will want to upgrade to bigger properties, which will fuel demand for new homes.
He also favours the country’s banks – also the subject of bubble concerns – and the two sectors have become the latest additions to the firm’s range of Hong Kong and China funds.
“Chinese households [have only been able to] own their houses on a fully-fledged basis over the past 15 years; this is a very recent phenomenon,” Do says. “In fact, the property stocks in China had been losing a lot of value; the price has gone down a lot over the past, let us say, 12 months.
“Wherever there is talk of bubble usually the share price comes down and when we do the analysis and if we think there is no bubble, then it presents an opportunity for us. So, banking and property are the new additions which we are making to our funds which invest in Hong Kong China.”
Do also believes the Taiwanese equity market, which has lagged behind the rest of the region for the past 10 years, will begin to see a recovery. He says Taiwan’s fortunes over the past decade have been based on the stunted growth of the sector following the bursting of the TMT bubble.
“The technology cycle is turning and we are seeing companies investing a little bit more in technology and we have all these wonderful LCD TV screens and high definition TV screens being made available,” he says.
“There are a lot of new things happening to the technology sector to entice investors back. Also, we have had little investment in the technology sector over the last five years or so; in fact, the capacity is in some kind of shortage right now.”
