China’s middle class a ‘tidal wave’ investors are failing to appreciate: Primavera Capital founder
- It is only a matter of time before the currently depressed market stages a rebound, according to Fred Hu
- When investors become convinced that stimulus efforts are real, not just lip service, they will jump back in ‘big time’, he says
The rise of the middle class in China is a “big tidal wave” that global investors have not fully recognised, and it is only a matter of time before the currently depressed market stages a rebound, according to the head of private-equity firm Primavera Capital.
The healthy parts of the world’s second-largest economy, such as consumer spending, services and technology and innovation, are still growing steadily despite the property downturn, Fred Hu, Primavera’s founder and CEO, said in an interview with the Post in Hong Kong.
“China is still very attractive and represents one of the largest – if not the largest – investment opportunities around the world,” said the former Goldman Sachs chairman for Greater China. Global investors have failed to fully grasp the magnitude of the opportunity the rise of China’s middle class represents in terms of spending, GDP [gross domestic product] growth, real wealth creation and superior returns to investors, he added.
Home to the world’s largest consumer market after the US, China is set to boost the stature of more home-grown brands as they cater to middle-class demand, he said. Meanwhile, multinational corporations active in China may want to reconfigure their presence amid geopolitical concerns, creating new investment opportunities, Hu added.
Healthcare is one strong emerging industry, as more Chinese join the middle class, he said.
“For [the Chinese] middle class, you have a house, you have a car, you have an iPhone or Huawei,” Hu said. “So of course you will just spend more on health and longevity. It’s a big opportunity, whether it’s in pharmaceuticals, medical devices, healthcare services, hospitals or clinics.”