Craig Farley is manager of the Ashburton Chindia Equity Fund. His diary runs from October 9-15.
I arrive in Taipei jet-lagged after a 30-hour trip, freshen up and head out for a property tour. The market is on fire and all three sites are pre-sold, with apartments in the business district selling for $4m (£2.5m). The buyers are not speculators but successful local businessmen and more frequently, those with business interests in China. Everyone is trying to tap the world’s best consumption story.
Stroll across town to sample some of the excellent dim sum. Relative to major cities in China, the air quality is better and the area greener, with many of the buildings retaining Japanese influence dating from the takeover at the end of the 19th century. (article continues below)
Picked up at 6.30am from the hotel as I am visiting several companies including a small-cap oil and gas pipeline manufacturer, a supplier of speciality resins and sealants for construction and machinery applications and the world’s largest e-paper producer. The great thing about Taipei is that unlike Beijing, Mumbai and Seoul, five or six meetings a day is possible. An added bonus is a high-speed train to Taichung. The journey is seamless, the timing perfect, the carriages spotless and the cost highly reasonable. Two companies merit following up with more homework.
Meetings with several analysts covering key beneficiaries of the capital, ranging from luxury hotels to airlines and broking houses. Meetings over, I head to the airport but have cut it too fine and miss my flight to Hong Kong. A new ticket is immediately issued for the next flight. No charge. Upon landing, I take a shuttle to southern China’s Guangxi province.
We arrive close to midnight in Liuzhou, Guangxi region’s industrial centre, expecting a lock-down. Instead it feels like the morning rush-hour as we were greeted with heavy traffic, busy open-air restaurants and hairdressers doing decent trade. In the morning we visit two healthcare companies, which supply medical devices. A much-improved social safety-net is one of Beijing’s primary policy objectives as it seeks to shift its economy towards a “harmonious society”. Branding and distribution (as with many industries) will be central to success.
The base for my two-day alternative energy conference is Guilin. Anthony Bolton and Mark Mobius are here too. The morning session focuses on the macro level, listening to strategists and party policymakers discuss the broad outlook for the global economy and its impact on China. Despite the media hype about a ’currency war’, the political and economic reality could not be more different. Spend the afternoon with companies across a range of sectors including auto parts suppliers, wind turbine blade manufacturers and solar panel producers. A few companies are worth following up.
More of the same, but with a focus on industrial automation (control systems, precision instruments and mining equipment) which is one of our key themes and a sector that we expect to form an increasingly large proportion of our China exposure. A handful of Chinese companies are emerging that are able to compete on an international platform with global leaders. The speed at which these companies are moving up the value-added curve in terms of physical and intellectual capital is astonishing. Conference over, I head to the airport to catch an internal flight to Hong Kong before heading home.