Global fund managers look to new industries to sustain China growth

Top global fund managers see fresh investment opportunities on the mainland in sectors such as health care, insurance and information technology as the leadership harnesses new drivers to sustain growth by steering it into a consumption-led economy.

Hong Kong was the worst-performing developed market globally last year, due in big part to concerns over the slowing growth on the mainland. The mainland's benchmark Shanghai Composite Index was Asia's worst performer on the back of the same concerns.

However, fund mangers now say some of the market corrections have been excessive and that picking the right stocks in new industries at this point can pay off as Beijing adjusts the growth model.

Raymond Ma, who manages the China Consumption Fund at Fidelity, sees insurance, health care, information technology, consumer staples and consumer discretionary as the "New China" sectors that are likely to do well in coming years.

The five industries' weighting in the MSCI China Index, about 30 per cent, was expected to double to more than 60 per cent in the next five years, Ma said.

"The third plenary policy document [issued after a key Communist Party meeting in November] was above my expectations," Ma said. "It answers almost all challenges arising from Old China to New China's transition.