Keeping Tabs on China’s Favorites
January 22, 2014
President Obama is set to deliver his fifth State of the Union Address next week on January 28, a key opportunity for our nation’s leader to comment on the well-being of the country as well as his plan for the upcoming year. Americans won’t be the only ones listening to such a speech though.
Chinese citizens will be tuning into a similar forecast in March delivered by Premier Li Keqiang, the “Annual Government Work Report.” Li’s report will highlight the direction of the Chinese economy in 2014, and as I like to remind shareholders, government policies are a precursor to change, so I believe the report holds significance for investors.
Xian Liang, new co-portfolio manager of our China Region Fund (USCOX), pointed out to me this week an interesting idea about policymakers in China. More specifically, he noted how their presence during the planning of Premier Li’s speech could very well signify what’s happening in the Chinese market.
On January 17, Li invited several academics and corporate executives to give their input on what “vital” factors should be included during his annual report. Judging by the guest list, and pictures published on the government’s website, Xian said it is quite clear which industries are currently favored by policymakers in the country.
Two familiar faces caught Xian’s eye as he noted Li’s guest list: Lei Jun and Pony Ma.
Circled in the picture above is Lei Jun, or the “Steve Jobs” of China. Lei founded KingSoft, Xiaomi and YY, all technology and social networking names. More recently, Lei even converted Apple investor Steve Wozniak into a user of the Xiaomi, a popular smartphone maker, instead.
In the second picture below is CEO of Tencent Holdings Ltd, Pony Ma. Tencent is the maker of mobile app WeChat, a name you may remember me mentioning previously, which since June of 2013 has been one of the most popular free apps to be downloaded.
With such open government policy support, we believe the technology and Internet areas are positioned to succeed in 2014.
This is one thing we watch when managing our funds at U.S. Global Investors. The China Region Fund (USCOX) has owned both YY and Tencent Holdings Ltd, both of which are names that fall into one of the strongest three sectors in our fund, the technology sector.
Take a look at the strongest sectors in the China Region Fund now.
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All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content. Holdings in the China Region Fund as a percentage of net assets as of 12/31/13: Apple Inc 0.00%, Google Inc 0.00%, KingSoft Office 0.00%, Tencent Holdings Ltd 0.00%, Xiaomi Inc 0.00%, YY Inc 1.26 %.