Ashburton outlines key themes at Jersey conference
The recent terrorist attacks on Paris, the rapid growth of technology that is making self-driving cars a real possibility, and devices that are able to automatically administer insulin to diabetics when they need it were among the developments investment fund managers will be considering in 2016 and beyond, a panel discussion featuring Ashburton investment experts has revealed.
The panel was assembled before an audience of Ashburton clients, fellow employees and other invited guests on Thursday evening 26 November in Jersey, where Ashburton was founded and its investments operations are based.
The event was moderated by BBC broadcaster Huw Edwards (pictured), who set the stage by noting that the terrorist attacks in Paris on the night of 13 November had “raised big questions” that “lots of you in this room will be wrestling with…as you think about your strategy in the months ahead”.
“Simply in terms of how the EU is bolted together – if we start we revising the way the [free movement between EU states] works”, Edwards added, “we…will start to change some very fundamental things”.
A strong conviction on the investment potential of India was another key investment message that emerged over the course of the event, which was said to be the first of its kind held by Ashburton in Jersey.
As for China, Ashburton’s Asia focused fund manager Craig Farley noted that although it “quite apparent to everyone here that China is certainly decelerating”, many of the fundamentals about that country and its investability hadn’t actually changed so much as the perception of the risks inherent in investing there, particularly once certain long-lurking issues began to hit the headlines.
“In aggregate, we certainly feel that this is going to be more of a muddle-through scenario” than an overnight recovery or collapse, Farley went on in response to a question posed by the BBC’s Edwards.
“China will continue to grow, albeit slower than before, and Beijing will employ fiscal expansion and monetary easing”, among other measures at its disposal, to help to calm market tensions.
Ashburton fund manager Marianna Georgakopoulou added that China’s banks faced some challenges ahead, as they dealt with their problem loans, and that this would inevitably have a knock-on effect across the region.
But asked whether China faced an “inevitable banking crisis”, she pointed out that China’s government had solid reserves, the Chinese central bank has the ability to print money as needed, and that the banks that comprise China’s banking system “are not as inter-connected globally” in the way that, for example, Lehman Brothers was.
“So, it is a big issue, but…they will do what it takes to sort it out.”
In an interview after the panel discussion, Jonathan Schiessl, head of equities at Ashburton Investments, elaborated on the investment house’s pro-India stance.
“India has a number of differentiating factors: demographics; huge sectors of the economy that were black or informal, now coming into the formal, official space, which represents a huge market share and growth opportunity; an inherently entrepreneurial population,” he said.
And compared with China, India has far more listed companies of the kind foreign investors would want to be in, such as those of companies that cater to the domestic consumer.
“A lot of people love the Chinese consumer story, but it only accounts for a tiny percentage of [the Chinese] index,” he explained. “So if you wanted to buy consumer stocks in China, the few that you could choose from would be extremely expensive, because of the rarity value. Or you buy stock in a multi-national listed somewhere else that has a little bit of exposure to the consumer market in China. But it’s not as though it was a big part of the story.
“In India, though, you can find [listed] Indian companies that are focused on the Indian consumer market, across multiple sectors
“So what you buy when you buy India, is you’re buying into really good quality Indian companies that are geared into the growth story. And so you don’t need to buy Western multi-nationals.
“India, for Unilever or another large company that may be doing reasonably well there, still only represents a very small portion of what is otherwise a very big global pie.
“So that, I think, is one of the key differences for India, in that, when you’re buying the market, you’re actually buying the story, as opposed to if you buy in China, you’re buying the state, you’re not necessarily buying the interesting parts of the story, such as the consumption side.
Sure, nowadays you can buy all of these Chinese internet stocks listed in the US [such as Alibaba] and Hong Kong, and you can get some interesting plays on the Chinese consumer; but that wasn’t always the case. And there are still multiple other sectors which you just can’t play.”