HONG KONG (Reuters Breakingviews) - As China bulls gain momentum, a new breed of bears has awakened, too. Waning concerns about the country’s economy, debt and infrastructure projects were reflected in some of the investment opportunities proposed at Sohn Hong Kong, the annual idea-fest that helps raise money to fight cancer. Scepticism about tech titans, however, suggests a new mindset shift could be underway.
It was a veritable hedge-podge of 11 regional buying and selling theses presented on Wednesday afternoon at the Asia Society’s arsenal-turned-art space. Oasis boss Seth Fischer unveiled his latest activist campaign, at Japan Asset Marketing, to the strains of Bob Marley’s “Jamming,” while Soren Aandahl of Blue Orca Capital got laughs as he pressed his campaign against Hong Kong-listed Samsonite using Instagram photos posted by brand ambassador Cristiano Ronaldo.
Conclusions on China were an equally mixed bag. After expressing concerns about the yuan at the same event four years ago, Carl Huttenlocher of Myriad Asset Management touted mainland Chinese companies. He reckons MSCI index inclusion and other factors will help make so-called A-shares the world’s best-performing equities over the next few years. Oxbow’s Wesley Wong extolled state-backed Guangzhou Baiyun International Airport.
Such recommendations mirror the investment community’s growing optimism about the People’s Republic. It has been a year since its economy or credit conditions were the biggest “tail-risk” worry for global fund managers, according to a regular poll conducted by BofA Merrill Lynch. And veteran Wall Street prognosticator Byron Wien, of Blackstone, this week advocated finding more ways to commit capital to China.
Yet there were also signs of changing sentiment towards the country’s internet champions, which have commanded whopping valuations for their top-line growth. APS founder Wong Kok Hoi used his Sohn time to trash JD.com, which is recommended by 31 of 36 analysts tracking the $50 billion online retailer, according to Eikon. Questioning whether Tencent could live up to the market’s outsized expectations, Ben Fuchs of BFAM suggested using put options to take advantage of any industry or company selloff. That follows a recent debate about whether the $480 billion videogame and chat-app group is entering a tougher phase. Collectively, the investment script could be flipping on China.
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