Sunny Bangia, portfolio manager at Antipodes Partners
The intense investor focus on Chinese regulatory risk, particularly in the tech sector, will pass in time. There is no question Chinese regulators have acted in a blunt fashion recently, but is it unusual for regulators globally to regulate lenders, protect consumers from anti-monopolistic behaviour, or have concerns around data security?
I feel strongly that China is not anti-private enterprise and leaders understand the nation’s economic growth is dependent on a vibrant private sector. Valuations of Chinese tech, compared to similar business in the US over a long period of time, would imply any additional regulatory risk in China is well priced in. We have used the recent sell-down to increase exposure to Chinese domestic businesses, which pass our extensive regulatory stress testing.
Meituan is a dominant business with a very interesting secular growth opportunity. It is China’s largest food delivery business, the Uber Eats of China, and has used its dominance in food delivery to quickly take the lead in community group buying and we think it will be hard to dislodge. Ultimately, community group buying can take 10% of China’s grocery market over the next five years.