Focus op Chinese techbedrijven in 2022

VIDEO - Morningstar kijkt naar 2022 met Morningstar Investment Management's CIO Dan Kemp. Hij praat ons bij over de kansen voor Chinese technologiebedrijven in 2022.

Ollie Smith 13 januari, 2022 | 10:29
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Ollie Smith: Our special week on the outlook for 2022 is nearing its end. But before we finish, I want to catch up with Morningstar Investment Management's Global CIO, Dan Kemp, to ask him about his team's report on what might happen next year.

So, Dan, thanks so much for joining me. A big question first. In your report on the outlook for 2022, your team talks about the growing case to invest in China. Could you just explain a little bit more about that?

Dan Kemp: Absolutely, Ollie. And hello, it's great to be with you today. So, when we think about investment in general, we think the best opportunities tend to occur where you see companies or assets that are undervalued when you take a longer-term perspective. And typically, that undervaluation comes from people being particularly concerned about one issue that's fixed in their minds and that leads to an asset becoming unpopular in the minds of investors, and investors tend to shun that asset preferring other things that are less troubled. And that's where we see the opportunity in Chinese companies at the moment, but particularly, large Chinese technology companies.

You'll know, of course, how popular the large U.S. technology companies are, companies like Facebook, now called Meta, Google, other companies like that. They're very, very highly valued. Well, a lot of the characteristics that make those companies so attractive we also see in Chinese technology companies. But because of an ongoing crackdown by the Chinese government there's a lot of concerns about these companies, and we've seen prices falling and they are now much less expensive than they used to be, much better value, in our mind, than the U.S. technology companies. And consequently, that's a focus for us as we look to build the technology exposure in the portfolios. So, just giving a better value angle on technology.

Smith: Sure. And just sticking with companies for a moment, I mean, inflation is a huge concern for investors. Where do energy stocks fit into that picture given the hunt for companies that are positively correlated to inflation itself?

Kemp: Well, that's right. We're pretty enthusiastic about energy companies at the moment and have been for well over a year now. And that's because, you're right, energy companies provide some protection against inflation typically, because energy is one of the main sources of inflation. And so, energy companies are seeing the price of energy rising, they can pass on a lot their cost of production and so, that gives them a positive relationship with inflation. But again, when you're thinking about buying something with inflation protection, then the price you pay for that sort of insurance, we can think of it that way, is really important, and we see energy companies again as being undervalued. People got very concerned about the future for energy companies back in the depths of the COVID pandemic when energy prices went briefly negative. And so, that was a big concern about this sector. That led to people being very negative. We were much more positive from a long-term perspective, and we still see opportunities there regardless of whether inflation is high or low, but they're likely to be particularly helpful if inflation remains high.

Smith: And just finally a bit of an end-of-year question. On the editorial team I think we each have a favorite topic that we'll monitoring next year. I have to confess I'm becoming increasingly interested by the take up of cryptocurrency. And so, I was just wondering what your pet topic is. What will you be personally looking at next year?

Kemp: So, my pet topic is a bit weird to be honest. It's probability. And I know that sounds strange, but when we think about investing, of course, we're always focused on the future. And as human beings, we're naturally attuned to look for patterns, to seek narratives, to expect history to unfold in a deterministic way, because we really know that the future is not like that. The future is probabilistic. We have to understand probability. We have to think in probabilistic ways and put aside our desire for patterns and narratives if we're going to make good investment decisions. And so, all of our focus is on trying to think probabilistically about the future and really make better investment decisions that way.

Smith: Dan, as ever, pleasure to chat. A very happy Christmas to you when it comes. Until next time, I've been Ollie Smith for Morningstar.

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Ollie Smith  is editor van Morningstar UK

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