“The authorities have deep pockets to manage the slowdown, deflate asset bubbles and avoid a so-called ‘hard landing’. Over the longer term, we think companies that can tap into growing domestic consumption are attractive.”
Companies such as travel agents, supermarkets and healthcare providers that tap into growing wealth and domestic consumption will be attractive to investors, he said.
A-share warning
China’s retail investors have been the driving force behind the A-share rally, according to Young.
“Speculation, rather than corporate earnings, has driven recent share price gains. Investment flows can easily reverse if further government stimulus fails to meet expectations.
“The latest corporate results point to slowing growth. As long as investor confidence can be sustained, then further gains are possible.
“On the other hand, the money that poured into the A-share market can just as easily reverse direction at the first major shock.”
