Ghost Stories Ep5: The Importance of China (with Siyabulela Nomoyi, Portfolio Manager at Satrix)

In this episode of Ghost Stories, Siyabulela Nomoyi (Quantitative Portfolio Manager at Satrix) joined The Finance Ghost to talk about the importance of China not just to the South African market, but to global markets in general.

We discussed:

• Why China is such an important partner to South Africa (and especially our mining industry).
• The sheer scale of China as a consumer market and the impact this has not just on US-based companies, but on a locally listed company like Richemont.
• The obvious link to the JSE that everyone talks about: Naspers/Prosus and the investment in Tencent.
• The risks in Chinese stocks over the past year or so, with Alibaba as the perfect example.
• Historical valuation multiples in Chinese stocks and how the current levels compare to those lows.
• South Africa's political allegiance in BRICS and the related strategic partnerships.
• The importance of the property sector in China and related support measures.
• How the relationship between sentiment and reality can drive substantial changes in valuation, particularly in geographies like China.
• The comeback in Chinese valuations as the economy has reopened.
• Interesting ways to play the look-through to China, with Nike as an example of a company with significant indirect exposure to the country.
• The importance of diversification in managing volatility.
• Demographic changes in China in terms of the working population and how this drives investment in different sectors, like healthcare.
• China’s approach to interest rates, which has been different to other emerging markets that tried to hike ahead of the Fed.
• The use of ETFs, like the Satrix MSCI China ETF which tracks the MSCI China Index that captures large and mid-cap Chinese equities, or the Satrix MSCI Emerging Markets ETF that has China as the largest country in its holdings. Bond exposure through an ETF is possible as well. Don’t forget the Satrix RESI ETF, which gives exposure to the resources sector in South Africa, with clear look-through exposure to China.

Disclaimer

Satrix Investments (Pty) Ltd is an approved financial service provider in terms of the Financial Advisory and Intermediary Services Act, No 37 of 2002 (“FAIS”). Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities. The information above does not constitute financial advice in term of FAIS. Consult your financial advisor before making an investment decision. Past performance is not indicative of future performance.