I take it A2M is the stock tip being referred to...
Liu bets on rise in Chinese spending growth

The Australian; Canberra, A.C.T.


Shanghai-born, Sydney-based fund manager Jun Bei Liu, from Tribeca Investment Partners, will tip another stock with exposure to the growing Chinese middle-class consumer market when she speaks at the Sohn Hearts & Minds Investment Conference at the Opera House on Friday.

Liu’s stock tip at last year’s Sohn Conference, a C hinese company called New Oriental Education and Technology, which is listed on the New York Stock Exchange, was the second-highest performing stock of all those tipped at the 2018 Australian conference.

The company, which is the largest teacher of the English language in China, saw its shares rise by more than 80 per cent in the period from the conference in November last year to the end of September.Ms Liu, who manages the $340m Tribeca Alpha Plus Fund, will tip an Australian-based company with an exposure to the Chinese consumer market during her presentation.

“We have been very positive on the growing Chinese consumer spending,” Ms Liu told The Australian yesterday.“It is a multi-decade thematic,” she said. “The company we like is based in Australia and is exposed to this theme.” Ms Liu said there were estimates that the middle class in Chinese would be spending more than $11 trillion over the next decade.

“We like companies with an exposure on that front.” Ms Liu said she had chosen New Oriental Education & Technology last year because it was well priced and was benefiting from the strong interest by Chinese parents in investing in their children’s education.

Ms Liu said there had been many success stories of Australian companies selling into China but also many failures as well. “Australian companies wanting to sell into China need to be very realistic about the investments they need to put into it,” she said. China is a very competitive market.

“To build a brand in China requires patience, long-term investment and a strategic partnership with local companies. We have seen a few companies that have done this, perform really well.“Others have done it but faded when they didn’t follow up with the brand investment and other things.”

She predicted there would be an increasing number of Australian companies attempting to sell into the China consumer market.

Ms Liu said there were risks for Australian companies, including the potential fallout from the US-China trade war and political tensions between Australia and China.But she added that they were largely “tail risks”, adding that Australia largely stayed “under the radar” in terms of any conflict with China.

Ms Liu said while Chinese economic growth was slowing down, it was still the world’s second-largest economy, growing at more than 5.5 per cent.“Most OECD countries are only growing at less than 2 per cent.”

She said China was also in a process of transformation from a manufacturing and fixed-investment-driven economy into one that was more focused on services and consumer spending.

“On that basis Chinese consumer spending will be enormous although the overall headline economic growth will be slower.

“It is the law of large numbers,” she said.

Friday will be the fourth Sohn Hearts and Minds conference in Australia. A line-up of the top Australian and international fund managers will give their stock tips and investment outlook during the day to raise funds for medical research charities.Other speakers at Friday’s conference include Ray Dalio from Bridgewater Associates, Rob Kapito from BlackRock, Howard Marks from Oaktree Capital, Mark Nelson from the Caledonia Investment Group, Phil King from Regan Funds Management and Hamish Douglass, co founder of the Magellan group.