Instead of outright growth, achieved mainly through exports and manufacturing, the Chinese government has switched its attention to growing Chinese wealth through consumption.
Services and consumer spending are the way forward to Chinese wealth, it reasons.
That has led to clear investment themes, according to Francis Cheung, the head of China strategy at the Asia-focused brokerage CLSA. He has turned bullish on China and on consumer plays in particular.
There are several sectors to watch to play the trend of rising Chinese wealth. Internet, consumer discretionary and materials stocks are performing particularly well right now. And they have done so since Cheung made the “big change” of turning positive on China at the start of the year.
Cheung’s top picks are JD.com (JD) and Ctrip.com.