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Eastern Promise: Can Asian growth be sustained? Speakers Tristan Hanson Jonathan Schiessl Craig Farley Investment Presentation Jersey - October 2009.

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Presentation on theme: "Eastern Promise: Can Asian growth be sustained? Speakers Tristan Hanson Jonathan Schiessl Craig Farley Investment Presentation Jersey - October 2009."— Presentation transcript:

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2 Eastern Promise: Can Asian growth be sustained? Speakers Tristan Hanson Jonathan Schiessl Craig Farley Investment Presentation Jersey - October 2009

3 Eastern Promise | Ashburton Investment presentation | October2009 Ashburton Investment Models Craig Farley Chinese consumption From Supplier to Buyer October 2009

4 Eastern Promise | Ashburton Investment presentation | October2009 A period of extraordinary change…

5 Eastern Promise | Ashburton Investment presentation | October2009 A period of extraordinary change…

6 Eastern Promise | Ashburton Investment presentation | October2009 A period of extraordinary change…

7 Eastern Promise | Ashburton Investment presentation | October2009 Chairman Mao Chairman Hua Guofeng Chairman Deng Xiaoping Chairman Jiang Zemin Chairman Hu Jintao How did we get there?

8 Eastern Promise | Ashburton Investment presentation | October Laying the foundations… Deng Xiaoping: Paramount leader of the PRC from 1978 to Inherited country wrought with social and institutional woes left over from the Cultural Revolution. Led Chinese economic reform through synthesis of theories known as ‘socialist market economy.’ Opened China to foreign investment, the global market and limited private competition. ‘I don’t care if it’s a white cat or a black cat. It’s a good cat so long as it catches mice.’ (quote from Guangzhou conference, 1961)

9 Eastern Promise | Ashburton Investment presentation | October2009 Revolutionary steps taken in the 1990s 1) 50 million state workers sacked over 6 years. 2) Beijing privatised China’s housing market, moving quickly from 15% to 70% urban ownership. 3) The Party relaxed controls over entrepreneurs.

10 Eastern Promise | Ashburton Investment presentation | October Fast forward to the current day… From a low base in the early 1990s, consumption accounted for almost 50% of GDP growth in underlying demand drivers: 1) Increasing consumer confidence 2) Absence of household debt 3) Strong income growth 4) Mild deflation 5) Emerging consumer class 6) Government stimulus

11 Eastern Promise | Ashburton Investment presentation | October Rising urban population Source: CEIC, Nomura Global Economics Number of Migrants - Rural to Urban Year Million

12 Eastern Promise | Ashburton Investment presentation | October Strong income growth Source: CEIC, Nomura Global Economics Real GDP growth and GDP per Capita Year US$ %y-o-y

13 Eastern Promise | Ashburton Investment presentation | October Mild deflation Source: Bloomberg China CPI, % YOY Jun-01Jun-03Jun-05Jun-07Jun-09 % CPICPI FOOD

14 Eastern Promise | Ashburton Investment presentation | October Very low leverage Source: CEIC, Datastream, RBI, RBA, CLSA UK Australia USA Korea Japan Malaysia Taiwan HK Singapore Thailand China Indonesia India Philippines Consumer debt as % of GDP, 2Q09 (%)

15 Eastern Promise | Ashburton Investment presentation | October2009 China: Additional fiscal stimulus aimed at consumption DateGovernmentPeriodProjectsAmounts (RMB bn) 5-Mar-09Central2009 Subsidies for rural households to purchase electric appliances, motor cycles and automobiles 40 5-Mar-09Central2009Agricultural subsidies123 Subsidies for purchases of agricultural machinery13 5-Mar-09Central2009 Interest subsidies to support firms’ technology upgrade 20 5-Mar-09Central2009Employment42 5-Mar-09Central2009Social security293 5-Mar-09All levels In the following three years Healthcare reform (RMB331.8bn by central government) 850 Total1381 Data source: Premier Wen Jiabao’s Working Report to the NPC (March 5, 2009) and Nomura Global Economics. RMB500bn tax cuts and RMB1.4trn non-investment spending Non-investment Spending Plan in 2009

16 Eastern Promise | Ashburton Investment presentation | October A multi-decade investment story Household Consumption Growth Year % y-o-y JapanUSChina

17 Eastern Promise | Ashburton Investment presentation | October A multi-decade investment story Consumer Goods Ownership (2007) TVPhoneWMRefrigeratorACPC Units per 100 households Rural householdUrban household

18 Eastern Promise | Ashburton Investment presentation | October2009 How is the Fund benefiting? Source: Ashburton Ashburton Chindia Equity Fund thematic weights Commodities Banks Real asset plays Consumer related Cash Others Infrastructure Clean & Green Energy

19 DISCLAIMER - UK Ashburton (Jersey) Limited and Ashburton Fund Managers Limited are referred to in this context as ‘Ashburton’. This document does not constitute an offer or solicitation to any person in any jurisdiction in which Ashburton is not permitted to communicate with potential investors, or to anyone who would otherwise be an unlawful recipient, and is only intended for use by original recipients and addressees. The original recipient is solely responsible for any actions in further distributing this document, and should be satisfied in doing so that there is no breach of local legislation or regulation. The information is intended solely for use by Ashburton clients or prospective clients, and should not be reproduced or distributed except via original recipients acting as professional intermediaries. This document is not for distribution in the United States. Prospective investors should inform themselves and if need be take appropriate advice regarding applicable legal, taxation and exchange control regulations in countries of their citizenship, residence or domicile which may be relevant to the acquisition, holding, transfer, redemption or disposal of any investments herein solicited. Any opinions expressed herein are those at the date this material is issued. Data, models and other statistics are sourced from our own records, unless otherwise stated herein. Ashburton believes that the information contained is from reliable sources, but we do not guarantee the relevance, accuracy or completeness thereof. We caution that the value of investments and the income derived, may fluctuate and it is possible that an investor may incur losses, including a loss of the principal invested. Past performance is not generally indicative of future performance. Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments. Ashburton (Jersey) Limited (Company Registration No ) and Ashburton Fund Managers Limited (Company Registration No ) are regulated by the Jersey Financial Services Commission and have their registered offices at 17 Hilary Street, St Helier, Jersey JE4 8SJ. RMB Asset Management International Limited (Company Registration No ) is the appointed UK service provider of Ashburton Global Funds; a Protected Cell Company recognised under Section 270 of The Financial Services and Markets Act 2000 and a subsidiary of Ashburton Fund Managers Limited. RMB Asset Management International Limited is authorised and regulated by the UK Financial Services Authority, a member of the FirstRand Group and has its registered office at Two London Bridge, London SE1 9RA. The United Kingdom Financial Services Compensation Scheme does not apply to investors in the fund. However, in certain circumstances, the Collective Investment Funds (Recognised Funds) (Compensation for Investors) (Jersey) Regulations 1988, as amended, may provide compensation for investors.


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