Latest figures show China’s GDP growth in the third quarter of 2023 exceeded economists’ expectations, reaching 4.9 per cent year-on-year, putting Beijing’s 5 per cent 2023 GDP growth target within reach. The quarter saw a sharp increase in retail sales, particularly for restaurants, alcohol, and cars, offsetting a drag from the property market. See more about China here.

Sehgal said awareness of ESG issues has intensified in emerging markets, with improved governance seen in many of these countries. China is also ahead in renewables, Sehgal added. It produces more than 70 per cent of all solar photovoltaic panels, half of the world’s leading electric vehicles and a third of its wind power. Chinese firm Daqo New Energy Corp (ADR), which TEMIT invests in, is one of the largest producers of polysilicone for the solar industry.  

TEMIT
Sehgal is the lead portfolio manager of TEMIT, an investment company listed on the London Stock Exchange, which provides access to the growth potential of firms from fast growing economies such as China, Mexico, Taiwan, Korea and India, with £1.94 billion ($2.36 billion) in total assets. It also embeds ESG considerations, best practice, and analytics in its investment processes. Top 10 holdings include the Taiwan Semiconductor Manufacturing Company (TSMC), Chinese tech giants Alibaba, Tencent and Baidu as well as South Korean Samsung Electronics and Brazil’s Petroleo Brasileiro.

The trust has strong exposure to Asia and is heavily overweight in IT, and slightly overweight in healthcare. It has also shown positive performance over the last five-year period, outperforming the index.

Although the trust declined in the first half of the latest financial year, it recovered in the second part of the year to end with a slightly positive annual return of 0.8 per cent. Sehgal put this down to Brazil’s recent recovery, in which they are overweight, as well as better performance in Korea and Taiwan. Asian tech giants such as TSMC and Samsung Electronics have turned the corner, so he expects improvements from here. Latest figures show TSMC posted better-than-expected earnings in the third quarter, helped by strong demand for artificial intelligence (AI) chips. Samsung is also stepping up investment in the development of advanced technologies such as artificial intelligence, robotics and 5G/6G communications.

Tencent is on the right track too. Sehgal believes that it should benefit from China’s Singles Day – the biggest shopping day in the world – which takes place on 11 November. The e-commerce giant Alibaba delivered record sales from Singles Day in 2021 with over $84 billion, up from $74 billion the previous year, despite concerns over the impact of the regulatory crackdown on technology companies. 

Angus Macpherson was recently appointed to the board as a non-executive director (NED) from October, and as chairman-elect of TEMIT. Macpherson will take on the role of chairman of the company in January 2024, working with the current chairman, Paul Manduca, who is retiring after over eight years on the board, to ensure a proper handover of responsibilities. See more here.