Cheah Cheng Hye: Finding value in China

Malaysia-born Cheah Cheng Hye believes China's woes are already in the price.

Cheah Cheng Hye is not a familiar name in the West. But the co-founder of Hong Kong-based Value Partners "needs no introduction" to Asian investors, says Indira Vergis on Citywire.

The Malaysia-born journalist turned fund manager has built a stellar record over the past two decades, with his Value Partners Classic Fund returning over 2,000% since 1993.

A contrarian who cites John Templeton as a key influence, his firm now manages more than $11bn.

Today, Cheah is more bullish on mainland Chinese stocks than "at any time since the global financial crisis", says Bloomberg Businessweek.

This reflects attractive valuations (the Shanghai Composite index trades on a forecast price-to-earnings ratio of 9.4) and the long-term benefits of China's anti-corruption drive.

The latter will be a short-term drag on the economy, but should improve the quality of growth and increase confidence in the market.

While Cheah is "as scared as everybody else" about risks in China's banks and property markets, he believes that these are reflected in valuations.

Importantly, "there is little to no foreign debt, so [problems] can be restructured and controlled within the system", he tells Citywire.

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