In what may feel like a lifetime ago, trade disputes between the US and China were the biggest economic storylines in the pre-COVID era, but the frosty relationship between the two superpowers could remain one of the top investment themes over the next decade.
It’s not just geopolitics, it will also have a direct impact on businesses as they are forced to take sides and perhaps adjust the way they operate on both sides of the fence. That said, great investment opportunities abound. For example, purely domestic Chinese internet companies are less likely to be hurt by a trade war. Indeed, the internet space has been one of the most attractive investment areas. Although companies such as Tencent initially copied their peers, they have since evolved into incredibly sophisticated multifaceted platforms. Today, the company could be viewed as one of the first-generation of Chinese internet companies.
There is also a new wave of innovative second- and third-generation companies run by dynamic entrepreneurs. These companies, such as multi-service platform Meituan, have scaled up incredibly fast due to the size and technological sophistication of China’s market.
Capturing these opportunities requires in-depth research, which can help us identify companies and industries that are aligned with the Chinese government’s policy priorities as well as those that have attractive long-term fundamentals.
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