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Veteran EM Manager Comments on Siemens and China’s GBA

This week, Siemens agreed to provide four H-class combined-cycle power units for power facilities in China’s Guangdong-Hong Kong-Macao Greater Bay Area (GBA) to cater for the growing population of more than 70 million people within the area.

Following on from this, Ronald Chan, the founder of the Hong Kong asset management firm Chartwell Capital, shares his views on how this development will positively impact emerging market investors based in Europe.

Ronald Chan, the founder of Chartwell Capital, says,

“Regarding the partnership, it’s encouraging to see that the region is going green for real and taking the effort to reduce coal-based power plants. One figure to correct in the article is that the population (please see this link for reference) in the GBA is now 86 million, not 70 million. 70 million was from a while years ago. This region has enjoyed decent population growth due to two reasons: 1) an influx of talent to look for opportunities in Shenzhen, the Silicon Valley of China; and the relaxation of the one child policy.

To give an overview of the direction of the GBA. It currently has a GDP of roughly USD1.7 trillion. By 2030, various reports (Colliers and PWC) suggest that it will reach roughly between USD3.7 billion to USD4.3 billion. If this figure is accurate, that means the region’s economic output will become the 5th if not the 6th in the world, matching today’s Germany and surpassing the U.K.

As an investor focusing on Asian companies, I have actually put my main attention to the GBA over the past few years. I tell clients that we are living in a V.U.C.A world – volatile, uncertain, complex, and ambiguous. To embrace volatility, but at the same time finding certainty, simplicity and clarity in Asia, the GBA provides just that. Growth in the GBA is quite certain, and higher than other emerging markets in the region such as Indonesia, Malaysia or the Philippines. The demographics of the region is straight forward with a good balance of youth, middle age, and elderly. Moreover, we all speak the same dialect, Cantonese, instead of Mandarin, thus sharing a culture that is unique. For example, we listen to Canto-pop music, not Mandarin music. And finally, policies on the GBA are clear by the local and central governments. Beijing has the vision of turning the GBA (a total of 11 cities in the region) into a super economic zone, specially focusing on Hong Kong being an international financial centre, Shenzhen as an innovation hub, Macau as a cultural and entertainment city, and Guangdong as a national core city after Beijing and Shanghai. So all in all, focusing on this region can bear loads of fruits and filter out all the noise in the world.”


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