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China myths? Top investor disputes big trends

One of the best investors in Asia, Hugh Young of Aberdeen Asset Management, warns people have got over-excited about China's economic growth rebound.

 
China myths? Top investor disputes big trends

China’s economic growth ‘rebound’ of previous months has been over-egged, according to experienced Asia investor Hugh Young, while reports of US companies returning home from Asia may also be exaggerated.

‘People have got a bit too excited about stats from the last month or so indicating that China is rebounding,’ said the Singapore-based Aberdeen Asset Management fund manager.

‘We’re quite sceptical about the growth prospects for China… but not to the extent that we think there will be a hard landing.’

Many investors have written off previous ‘hard landing’ fears for China – previously seen as one of the greatest threats to global markets – citing recent growth numbers as evidence that the economy has turned a corner.

‘We don’t see a massive rebound in its economy. It is wrong to see China as a saviour of Asia and of the world,’ Young, a Citywire AA-rated fund manager, added.

Young also seemed sceptical of another trend making headlines around the world: the re-shoring of manufacturing companies back from Asia to the US.

‘Suppliers are going back to the US, but not in a huge way,’ said Young.

He agreed that manufacturers were leaving China as wage costs there have risen rapidly over the past five years. ‘More importantly we have seen a move away from China itself. Yes, some of that will have gone to the US, but indeed also Mexico, some to places like Thailand.'

Young also painted a more nuanced picture of Asia’s prospects over the coming year than many investors. ‘Asia, of course, is part of the global economy and it’s not going to be an easy year,’ he said.

‘The earnings outlook is still cloudy, but corporate fundamentals are sound. We wouldn’t be surprised if it turns out to be another sluggish year for earnings … more important for us has been the fundamental strength of Asian companies.’

Young’s funds include Aberdeen Asia Pacific & Japan  and Aberdeen Asia Pacific , both of which feature in our Citywire Selection list of recommended funds.

You can find out more about Citywire Selection and Citywire Fund Manager Ratings.

5 comments so far. Why not have your say?

Hole Puncher

Jan 15, 2013 at 05:03

A knowledgable man and a trusted fund manager for me.

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Hole Puncher

Jan 15, 2013 at 05:04

I meant Hugh Young.

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David Oaks

Jan 15, 2013 at 15:16

Dear Citywire, please could you explain why you have introduced pop-ups of titles already listed in your email and to the right of individual articles? They seem totally superfluous and rather irritating.

David

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Geoff Downs

Jan 15, 2013 at 15:32

I think it is really good that a fund manager levels with investors about the economic realities. So refreshing compared to all the hype we usually get.

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HKMike

Jan 22, 2013 at 08:54

I have spoken to purchasers who say that, although manufacturing costs have risen in China, so has the quality. They are still buying there for that reason

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