Asia will be home to half of the global middle-class next year. China has been a major driving force behind this growth. The continent’s transition from low- to high-income has been a slow and steady process, which is why Comgest likes it. Understanding this income trend’s past contribution to our developed and emerging markets portfolios is key for investors in Comgest products. In the past decade, one-third of the sales growth of our European Portfolio holdings was driven by Asian clients. In our China portfolio, 90% of our holdings are exposed to the country’s burgeoning middle-class segment.
While “Mr. Market” may occasionally be blindsided by the macroeconomic cycle in China, our eyes are focused on the long-term structural trends that have enabled the country’s rise. Healthcare businesses, one of the nascent opportunities linked to the Chinese middle class, generally benefit from high barriers to entry, innovation and pricing power – all ingredients that Comgest seeks when analysing a company’s long-term growth potential. And, as we explain in this paper, our view is that this sector offers a lot of compelling long-term stock picking opportunities.
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This communication has not been updated since publication. The views expressed are valid at the time of publication only and may not reflect current thinking.