[ad_1]
Unlock Editor’s Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
Fund manager GQG has amassed $2.8 billion in holdings in Middle Eastern companies and expects to grow this, but its position in China has been cut to about half that amount.
The Florida-based asset management company was founded by Rajiv Jain, formerly a star fund manager at Vontbel Asset Management, and is backed by the regional government’s “business-friendly” approach and its plans. , has been piling up stakes over the past 18 months. Aim to diversify and break away from dependence on oil.
“By definition, there is a massive expectation of privatization to open up the economy,” Jain said. His firm manages $105 billion in assets and is best known for making a massive contrarian bet on Indian conglomerate Adani last year. “There is a real intention to move away from oil.”
Jain’s investments in the region include a $1 billion stake in IHC, a $246 billion UAE-listed conglomerate, which is a good way to gain exposure to the region’s strong growth. he explained. Last year, the Financial Times reported that the company’s highly concentrated ownership made it difficult to buy shares. Jain said free float provides sufficient liquidity.
GQG’s renewed interest in the Middle East means its funds are investing more money there than in China, the world’s largest emerging market. This represents a significant shift from five years ago, when the world’s second-largest economy accounted for 40% of the company’s emerging markets portfolio.
China’s weight in emerging market indexes has made life difficult for foreign investors over the past year, as China’s economy has slowed and trade tensions remain high, especially with the United States. They account for 27% of MSCI’s flagship emerging markets index, compared to 17% for India and just under 8% for the Middle East and Turkey combined.
Currently, only 5% of GQG’s emerging market investments go to Chinese companies. These bets have focused on state-owned groups including coal miner China Shenhua Energy and oil company PetroChina, rather than the technology plays typically favored by foreign investors in recent years.
Jain said China’s crackdown on industries that are often dominated by private companies has made it difficult to invest in China. Last month, the Chinese government’s sudden plan to curb overconsumption of video games wiped out 12%, or about $41 billion, of tech giant Tencent’s market value in one day.
“Everyone is worried about China,” Jain said. “They say they won’t do that, but they do.”
Global tech stocks, particularly the chip sector, are also among Australian-listed GQG’s big bets as demand for greater computing power, particularly artificial intelligence, increases.
“AI is bullish on chips because memory consumption will be 5 to 8 times higher,” Jain said, adding that he believes the current supply-demand relationship will continue for at least the next three years.
GQG invested in British chip designer ARM’s $5 billion New York float in September and has since increased its stake.
GQG also added to its holdings in Nvidia stock in the fourth quarter due to its strong belief in the chip sector, even though the stock had already more than doubled that year.
Nvidia was a key driver of what was dubbed the “Magnificent Seven” last year, including Apple, Tesla, Microsoft, Amazon, Facebook’s parent company Meta, and Alphabet. Jain said his own views on AI mean he prefers to think of the “Fabulous Five,” excluding Apple and Tesla.
[ad_2]
Source link
