Nomura heads to Australia
Japanese fund manager Nomura Asset Management will be launching a retail China fund in Australia next month.
The fund will be based on the Nomura China Stock Fund, which is benchmarked against the MSCI China Index and the MSCI Hong Kong Index.
A product disclosure statement is being prepared at present, and the product will be distributed in Australia by BDM Direct.
Nomura director of investment (Hong Kong), Kingston Lee, said the China economy was in a similar position to the Japanese economic outlook of the 1960s.
“What happened in Japan in the 1960s is happening in China today,” he said.
“The Chinese economy is about 40 years behind Japan.”
In the 1960s, Japanese urbanisation was at 38.8 per cent of the population, and in China today it is 37.9 per cent.
The per capita electricity usage in Japan was 1,236 kwh in 1960 and in China it is at 1,071 kwh.
The year of people reaching $US1,000 income a year was achieved in 1966 in Japan, while China achieved this goal in 2003.
Lee said the strong domestic-led economic growth is expected to continue, with GDP growth forecast at 11.9 per cent next year.
“Most institutions forecast 2009 growth originally at about 8.5 per cent, but this is now forecast to exceed 9 per cent,” he said.
“Private consumption is forecast to be 10.5 per cent in 2010, and government consumption 10 per cent.”
Lee cites the growth in Chinese car sales as an example of how this domestic growth is driving up the economical outlook for the country.
In September this year, car sales growth in China was 80 per cent, according to Nomura figures.
“Bank loans have supplied fresh blood to the domestic Chinese economy, with loans as high as RMB 10 trillion being achieved before the year end,” he said.
“Travel ranks as a major expenditure during the next 12 months, according to recent Chinese survey on average households,” he said
“A typical household in China will save 24 per cent of their income.”
The survey spoke to 250 middle-class families in five major cities in China to see how the global downturn has affected their spending and saving patterns.
The average disposable income of these families was RMB 21,564 per capita, 37 per cent higher than the national average.
The survey found that of those families who didn’t own a home, 85 per cent said they plan to buy one in the near future and 28 per cent said they will buy a second home in the next three years.
Lee said China’s low leverage of foreign debt to GDP (currently at less than 10 per cent) will also help drive the economy in the future.
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