John Malloy, who helps manage about $10 billion in equities as co-head of emerging and frontier markets at Redwheel, has China as his largest overweight and favors companies including Alibaba, Kuaishou Technology and Baidu. He’s holding firm even as mainland stocks and Hong Kong-listed technology shares see their worst August in eight years.
While the fund was “arguably” early on the trade — Redwheel started to favor shares near the end of last year — its positions have about 50% upside in terms of price targets, said Malloy, who began investing in emerging markets back in 1993 at Baring Asset Management. The MSCI China Index traded at a 12-month forward earnings multiple of 9.7 times as of Friday, versus a five-year average of 12.1. The rout in Chinese equities has seen an index of the nation’s shares listed in Hong Kong become one of the world’s worst performers this month among more than 90 equity gauges tracked by Bloomberg.
The South American nation offers “great assets” and companies that play key roles in the renewable supply chain, protecting biodiversity and providing essential services, Ting Ang, a New York-based portfolio manager at Redwheel, said in the same interview.