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Mobius: Alibaba, Tencent to Flourish Despite China Tensions

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By    |   Monday, 25 May 2020 01:31 PM

Investment guru Mark Mobius says there are still a lot of investment opportunities in China despite rising tensions amid a growing standoff between the United States and China over civil liberties in Hong Kong and lingering trade disputes.

“There are lots of stocks in China that can be purchased that are very profitable and growing,” the Mobius Capital Partners co-founder told Bloomberg Television.

“We look at stocks that are not going to be impacted by trade war. That's number one. Number two, we're looking at stocks that have a global footprint in addition to having this incredible market share in China. And then number three we want stocks that have very, very strong balance sheets,” he said.

He cited Tencent Holdings Ltd. and Alibaba as among the best bets he would identify by name.

“We have to have companies that are able to acquire other companies and gain market by doing so. So those are I would say would be the characters we're looking for in the Chinese stocks,” he said.

“There are a number of others similar to that that would fall into that category. I can't give you the names because we may be buying,” he said.

President Donald Trump's warning on Thursday that the U.S. would react strongly to China's plan for a national security law in Hong Kong has raised concerns over Washington and Beijing's possibly reneging on their Phase 1 trade deal, Reuters explained..

Stocks edged lower late Friday after the U.S. Commerce Department said it was adding 33 Chinese companies and other institutions to an economic blacklist for human rights violations and to address U.S. national security concerns.

The increasing rhetoric between Washington and Beijing has knocked Wall Street off multi-month highs, although the three main indexes still all rose around 3% for the week, fueled by optimism about an eventual coronavirus vaccine and the easing of virus-related curbs.

"We still think COVID-19 concerns are in the driver's seat, but we could see U.S.-China relations move back into the front seat," said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

More turbulence for U.S.-China relations is prompting some investors such as UBS Wealth Management to hold a "defensive" position in Hong Kong, Reuters said. "(The) larger risk for global investors is what happens if it becomes further enmeshed in broader relations," said Mark Haefele, its chief investment officer.

China's proposed national security legislation for Hong Kong could lead to U.S. sanctions and threaten the city's status as a financial hub, White House National Security Adviser Robert O'Brien said on Sunday.

Hong Kong police fired tear gas and water cannons to disperse thousands of people who rallied on Sunday to protest Beijing's national security law.

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Investment guru Mark Mobius says there are still a lot of investment opportunities in China despite rising tensions amid a growing standoff between the United States and China over civil liberties in Hong Kong and lingering trade disputes.
mobius, stocks, china, tensions, invest
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2020-31-25
Monday, 25 May 2020 01:31 PM
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