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Straits Times
30-06-2025
- Business
- Straits Times
China fund beats 97% of peers by buying Gen Z darlings Pop Mart, Laopu Gold
Shares of Gen Z-favoured Labubu-maker Pop Mart and Laopu Gold, known for distinctive gold pendants, have staged wild gains this year. PHOTO: BLOOMBERG BEIJING - A 30-year old Chinese fund manager is trouncing peers this year with a portfolio stocked with Gen Z-favoured names like Labubu-maker Pop Mart International Group, betting that new-age shopping trends can help his fund overcome the country's economic sluggishness. Xie Tianyuan's Penghua Selected Return Flexible Allocation Mixed Fund has returned 24 per cent this year, ranking in the top 3 per cent among roughly 2,300 peers, data from fund tracker East Money Information show. That's a turnaround from its recent past when holdings in traditional sectors like alcoholic beverages and farming dragged performance. A gauge for Chinese stocks listed in Hong Kong has risen 20 per cent this year. The Shenzhen-based fund manager, who took over early 2024, wasted little time in replacing what was then the fund's top holding Kweichow Moutai, a baijiu distiller, with the maker of smash-hit Labubu dolls, Pop Mart. His repositioning for the fund, which has about US$7 million (S$8.9 million) in assets under management, reflects how cultural shifts – brought on by digital influence and youth spending – are creating opportunities for Chinese investors navigating broader challenges in the world's second-largest economy. His conviction strengthened after witnessing the popularity of the toy maker's products in Thailand, which, he says, signalled 'non-linear growth with every metric showing breakout potential.' Growing up immersed in Japanese anime culture – his desk is adorned with Dragon Ball Z figurines – Mr Xie said he developed an eye for identifying promising characters or designs, called 'IP brands,' by mixing personal fandom and online research. That he himself is demographically a member of Generation Z, the driving force behind China's new 'emotional spending' consumption trend, helps him understand what may resonate beyond advertising and go viral. 'Opportunities in the sector in the years to come will be on the single stock level as the population dividend comes to an end,' he said. 'I pick companies that have breakthrough products, new business models and innovative sales channels – products that are both visually appealing and fun.' His top pick, Pop Mart, accounted for 10.5 per cent of the fund's total assets as of March, the top end of its maximum ownership in a single stock allowed, filings show. Other big bets include Mao Geping Cosmetics, up 83 per cent this year, as well as Chongqing Baiya Sanitary Products, and Yantai China Pet Foods. Mr Xie's strategy lies firmly in targeting the Gen Z consumption trend, where purchase decisions are driven by emotional triggers and hobby interest. Despite looming threats from Donald Trump's proposed tariff hikes, this behavioural change fuelled rallies in pockets of China's stock market, especially after the momentum from artificial intelligence began to fade. Shares of the companies at the heart of this trend – including Pop Mart and Laopu Gold, known for distinctive gold pendants – have staged wild gains in 2025. Laopu is up more than 2,000 per cent since its initial public offering in Hong Kong a year ago. The rally has expanded to include sectors like medical aesthetics, pet foods and even vape products. Another potential area for Mr Xie: tapping into the rising popularity of sparkling yellow wine. Still, the consumption-driven rally is showing cracks. Pop Mart tumbled after a People's Daily commentary on June 20 that called for stricter regulation of 'blind-box' toys – products in sealed packaging designed to conceal content and induce surprise and greater desire to collect them. Laopu faces greater selling pressure after the lock-up period from its IPO expired on June 30. Meanwhile, many Gen Z stocks are near or above their average price targets, and in turn, driving analysts to constantly find reasons to bump up their outlook. Mr Xie acknowledged that valuations in the sector may be getting ahead of fundamentals, with some stocks already pricing in earnings three to five years ahead. Still, he remains overall bullish, particularly on the stocks he's heavily invested in. 'The gains may look incomprehensible to some people, but it's actually all rooted in earnings,' he says. 'Growth for some is underestimated, while others are just in the early stages of their life cycle.' BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
22-05-2025
- Business
- Straits Times
Chinese firms go on fundraising spree amid rush of easy money
Thaw in US-China relations has encouraged money managers from London to Singapore to boost exposure to China. PHOTO: BLOOMBERG BEIJING – Chinese companies are seizing on a window of opportunity to raise capital as global investors pour money into Asian assets in search of alternatives to the United States. The surge in inflows created by the waning of US exceptionalism and the US-China trade truce has fuelled one of the most active fundraising booms the region has seen in years. By far the biggest deal has been the share offering by Chinese electric-vehicle battery maker Contemporary Amperex Technology Co. Ltd (CATL), but that's just part of a wider groundswell. Hong Kong share sales have raised US$25.8 billion (S$33.3 billion) this year, about 34 per cent higher than the total for all of 2024, according to data compiled by Bloomberg. Mainland companies issued US$2.8 billion of US dollar bonds in the second week of May alone, one of the busiest stretches in Asia this year, data compiled by Bloomberg show. 'The worst-case scenario of super high tariffs is behind us,' said Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong. The market conditions in China appear to be more supportive than in previous years, while interest-rate cuts from the People's Bank of China have boosted liquidity, he said. CATL raised US$5.2 billion in its Hong Kong Kong debut on May 20, the largest listing in the world this year and the biggest in the city in four years. The shares jumped 16 per cent on their first trading day. The outlook is also improving for troubled mainland developers that had been largely shut out of dollar bond markets due to the property debt crisis. Seazen Group is meeting investors this week about a potential dollar debt sale, which may make it the first public bond offering by a major Chinese private-sector developer in more than two years. The fundraising boom is a stark turnaround from just a few months ago, when geopolitical uncertainty and climbing interest rates had throttled demand for Chinese assets. Now, the thaw in US-China relations has encouraged money managers from London to Singapore to boost exposure to China amid optimism the country may be shaking itself free from years of sluggish growth. 'The percentage of the allocation to the global money already picked up significantly' for mainland-traded Chinese firms listing in Hong Kong this year, said Shi Qi, deputy head of capital markets at China International Capital Corp. in Hong Kong, speaking on Bloomberg Television on May 21. 'We see Middle East sovereign funds and also some South-east Asian sovereign funds as well as other global long-onlys actually add their allocation to China,' she said. There's a healthy pipeline of future Chinese share sales, many of which are by companies without heavy reliance on US exports. Those lining up to list shares in Hong Kong include drugmaker Jiangsu Hengrui Pharmaceuticals and sensor manufacturer Hesai Group. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
