Investment letters

•   Investment in China offers a high growth market, but with high volatility
•   Mega structural growth trends offer value-added opportunities
•   Comgest’s Quality Growth responsible investment style aims to moderate volatility and compound returns over the long term. 

Investing in China isn’t for the faint of heart. Despite over two decades of investment restrictions easing, the combination of geopolitical risk, an underdeveloped regulatory market and continuing cycles of Covid-related lockdowns has led to waves of volatility that can lash investors. The A-shares market alone has been twice as volatile as developed markets in the past 20 years. The long-term promise of Chinese growth seems destined to be tempered with the price of high volatility. But savvy investors know that high volatility, high share price dispersion and deep drawdowns also offer alpha potential, especially in a high growth environment. Comgest has been navigating these choppy waters since the early 2000s, and for quality growth investors like us, we believe that our style of investment can help like-minded investors to seize the growth opportunities on the horizon.

Since launch in 2001, the Comgest China Equities strategy (the “China strategy") has benefitted from a strong growth backdrop as China developed into the world’s second largest economy. 2001 was also the year that China joined the World Trade Organization (WTO), which kicked off the economy’s dynamic expansion. The country earned its reputation as the “factory of the world” thanks to an abundance of inexpensive human capital and continued investment in their infrastructure. 

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