Chinus Asset Management CIO Charles Mautz presented at the Alpha Edge East Conference in Palm Beach, Florida last week, on a panel focused on "China after 2015." Here are some key highlights:
- The Chinese government recently released its 13th Five-Year Plan. Two key components are (i) reform of state-owned enterprises and (ii) enhancement of the role of the private sector.
- China currently has 150,000 state-owned enterprises (“SOEs”) that control RMB 100 trillion in assets (US $15 trillion). SOEs earned an average return on assets of 2.4% in 2014. That return was negative if subsidies are excluded.
- As the Chinese government opens up more of the economy to competition, we believe private companies will take market share very quickly and at much higher profitability.
- In doing so, these private companies will create tremendous shareholder value, so it is an investment theme that we are following closely.
CHINUS ASSET MANAGEMENT (CHAM), a U.S. West Coast-based asset management firm, provides investors exposure to the alpha-generating growth in China, India, South Korea and Southeast Asia, by utilizing an active investment strategy and local managers in each region.
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