From a long-term perspective, we have identified China and India as two exciting markets with good potential, for several reasons. They are the world’s most populous states with increasing domestic consumption and both have in recent years undergone a number of different reforms that have improved the investment climate. In addition, India has a favorable demographic and a market characterized by private enterprise and entrepreneurship. Although the ESG can be challenging in these markets today, changes for the better seem to be underway in this area as well. China, for example, has signed the Paris Agreement and both countries are expected to make major investments in renewable energy in the coming years.
The management of these funds is characterized by fundamental analysis with a focus on a deep understanding of companies as well as disciplined and well-structured investment processes. Both funds have well-developed methods for integrated ESG analysis. China A-share Equity Fund in particular is characterized by a strong focus on ESG, in particular G, throughout the analysis and investment process. The funds are managed by locally placed management teams with a deep understanding of culture and the local market, good language skills and a broad network of contacts. Fund managers can also benefit from good resources within a well-established management organization with extensive experience in these specific markets, which is a strength.
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