While Covid-19 caused a short-term shock to the Chinese economy, the government’s quick and comprehensive mobilisation at the start of the pandemic has meant that the cyclical impact on markets has been short-lived. Meanwhile, as with many economies, the pandemic has accelerated certain structural trends in China that were already under way. We continue to find the most attractive opportunities in consumption, technology and healthcare, which are capitalising on China’s transition to a more consumer-driven economy.
Driving this shift is the country’s growing millennial population, which stands at around 400 million – more than the working population of Europe. This has had a huge impact on the technology and e-commerce sectors, cementing China’s position as the world’s number-one retail market.
Fresh food in 30 minutes
As Chinese millennials continue to demand various services at their fingertips, the growth opportunities in the consumer discretionary sector look compelling. Meituan Dianping (Hong Kong: 3690) is a prime example of a multi-level technology service platform enjoying accelerated growth in its user base.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The firm, whose unique selling-point is its ability to have fresh food delivered in 30 minutes within a three-kilometre radius, is the country’s leading website for locally sourced food-delivery services, consumer products and retail services. Since the beginning of the pandemic, merchants have accelerated their migration to online distributors such as Meituan, particularly branded restaurants with high-quality offerings that have traditionally focused on in-store dining instead of delivery services.
Technology is taking off
The technology sector is another key area that continues to offer huge long-term potential. Chinese millennials are more tech-savvy than previous generations, with over 90% having access to a smartphone. One of the companies benefiting from the acceleration in demand for technology is Bilibili (Nasdaq: BILI), a video-sharing platform with an emphasis on animation, comics and games. It is similar to the app TikTok.
It is a prime example of a “New China” company profiting from the changing consumption patterns of a new generation. Highlighting the exceptional levels of daily activity on its platform, in the third quarter of 2020 Bilibili reported total net revenues of $475.1m, an increase of 74% from the same period in 2019.
A robust outlook for healthcare
Even before the outbreak of Covid-19, China lacked adequately widespread diagnostic and healthcare facilities and suffered shortages of vaccinations for illnesses such as the regular flu. As consumers’ expectations rise, a focus on raising healthcare spending remains a clear trend, especially in outsourced clinical testing, diagnostics and vaccinations.
For example, the pandemic has shone a light on underinvestment in hospitals, where intensive care beds comprise a mere 5% of hospital beds compared with 15% in developed markets. This provides ample scope for long-term growth for companies such as Shenzhen Mindray Bio-Medical Electronics (Shenzhen: 300760), which manufactures medical equipment and is increasingly successful in export markets given its focus on research and development.
-
Are you one of 15 million people at risk of retirement poverty?Two-fifths of people in the UK aren’t on track for a minimum lifestyle in retirement, new data shows. Are there steps you can take to boost your pension?
-
150 banking hubs now open across UK – is there one near you?As the 150th banking hub opens its doors, a Post Office deal that offers basic banking services has also been extended until 2030. We explain what this means for you
-
Unilever braces for inflation amid tariff uncertainty – what does it mean for investors?Consumer-goods giant Unilever has made steady progress simplifying its operations. Will tariffs now cause turbulence?
-
'Technology will determine tomorrow’s top stocks in emerging markets'Opinion John Citron, investment manager of the JPMorgan Emerging Markets Investment Trust, tells us where he’d put his money
-
Two ways to tap into monopoly profits from airportsMost investors can’t get their hands on airports. Here are two ways you can
-
Three British mid-caps that could make 'attractive' investmentsOpinion Charles Luke, manager of the Murray Income Trust, highlights three UK-listed mid-cap companies, as he tells us where he'd put his money
-
Fat profits: should you invest in weight-loss drugs?The latest weight-loss treatments could transform public health and the world economy. Should you invest?
-
How investors could profit from Ramsden Holdings' four-part growth strategyRamsdens Holdings offers a diversified set of financial and retail services and a juicy yield, says Dr Michael Tubbs
-
How to invest in the booming insurance marketThe insurance sector is experiencing rapid growth after years of stagnation. Smart investors should buy in now, says Rupert Hargreaves
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocksOpinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
