Cameron Blanks from Pacific Equity Partners speaks to James Dunn at The Inside Network’s Alternatives Symposium in Melbourne on looking through the cycles and catalysing growth. The Inside Adviser
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China fund launches amid surge in Hang Seng
MA Financial, previously known as Moelis, has announced the expansion of its investment suite, pivoting its asset management business into the Chinese market. Named the MA Financial China Fund, the strategy will invest into a portfolio of 70 high-quality Chinese companies and be managed by onshore manager ChinaAMC.
ChinaAMC is one the country’s largest asset managers, with more than US$258 billion ($348.6 billion) in assets under management, representing as much as one-third of all the foreign capital invested in China in one way or another, and serving 180 million retail investors.
The partnership comes after MA Financial has built a strong record in attracting capital from the region while operating in-country offices.
The timing comes after what can only be described as a torrid time for the local Chinese market, which has fallen more than 20 per cent in March alone, on concerns about the country’s support for Russia and the continued blowback from an increase in regulatory activity. Yet the timing now couldn’t be better, with the market up more than 10 per cent in just two days of trading after an about-face by the government on various restrictions saw a surge in confidence.
MA Financial is quick to highlight that the structure will afford it control over the domestic governance and oversight while allowing investors to capitalise on relatively low valuations in a country which is under-represented in benchmarks.
According to its research, China accounts for 18 per cent of global GDP but just 3.7 per cent of the MSCI All Country World Index, a trend that is set to change. This powerful flow of capital will likely favour those already invested in the country.
The firm highlights the unique structure of the A-Share market, in that retail investors account for 80 per cent of daily trading volume, compared to about 23 per cent in Hong Kong.
These investors “tend to have shorter time horizons, are more momentum-driven, and less focused on corporate fundamentals,” says MA Financial. As a result, stocks are often mis-priced, creating opportunities for experienced active managers to capitalise on this inefficiency and generate outsized alpha opportunities.”
The fund will select 70 companies based on fundamental analysis with an ESG overlay, from a universe of 3,700 companies, among the deepest in the world.
