Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

People wear protective masks as they enjoy the spring weather on April 5, 2020 at a park in Beijing, China.

Kevin Frayer/Getty Images

China’s recovery from the coronavirus outbreak may hold investable lessons for the rest of the globe, according to fund managers who are closely watching – and have begun cautiously buying – in the world’s second-biggest economy.

With the worst of the outbreak yet to come in many countries, including the United States, new infections appear to be trailing off in China and businesses are gradually getting back to work.

Money managers are studying everything from subway patronage to noodle consumption – to understand the society and economy that is emerging from lockdown, as both a portent of what may be to come in the West and as a proving ground for new trades.

Story continues below advertisement

“What happens in China is incredibly important to how global markets react over the next few months, both in terms of the progress of the virus and how quickly the economy is bouncing back,” said Sydney-based fund manager Geoff Wilson, who runs US$2-billion in assets.

After observing that even as lockdowns lift in China, people are staying in and going online for entertainment, his fund has raised its stake in Chinese internet juggernaut Tencent Holdings Ltd. and increased exposure to similar stocks elsewhere.

Tencent shares have rallied nearly 17 per cent from a three-month low touched two weeks ago.

Some see opportunities in construction or commodities, while others are staying on the sidelines.

“Everything is up in the air,” said Chi Lo, Greater China economist at BNP Paribas Asset Management in Hong Kong. “From the usual industrial output to high-frequency data, to even travel by train or air traffic, we have to look at it now just to make sure we are kept abreast of what’s happening.”


The virus itself is the main focus, with palpable fear of a second wave of infections, as occurred in the 1918 Spanish flu pandemic, stymieing the recovery at home and abroad.

China now accounts for less than a 10th of worldwide coronavirus infections, 7 per cent of deaths and barely any of the new daily cases. Yet the reintroduction of some restrictions on movement this week underscores the fragility of that position. Companies and consumers remain on edge.

Story continues below advertisement

There are also worries about the impact of a global demand shock on China’s exporters, even if factory activity unexpectedly expanded last month, albeit marginally, after a collapse in February.

Which is why most investors are seeking out longer-term bets and seem to be relying more on their own contacts and intuition to assess the strength of the recovery.

“We’ve spoken to Tencent, we’ve spoken to [fast-food company] Yum China, we’ve spoken to a Taiwanese consumer company that sells noodles in China,” said Andrew Gillan, head of Asia ex-Japan equities at Janus Henderson. “We understand what’s happening on the ground … people are returning to work.”

He has increased exposure to China in the US$3-billion in funds he manages, and, while he cautioned against drawing too many parallels, said the trend of rising internet use that had buoyed holdings in Tencent and Alibaba Group Holding Ltd. would probably travel.

Tencent is an online conglomerate comprising online gaming, e-commerce and social-media arms, while Alibaba is primarily an online retailer. U.S. firms such as Facebook Inc., Apple Inc. and Alphabet Inc.'s Google are likely beneficiaries of the same trends, Gillan said.

Catriona Burns, global portfolio manager at Geoff Wilson’s Sydney fund, raised bets on Tencent, online retailer Inc. and gaming firm Activision Blizzard Inc for similar reasons.

Story continues below advertisement

“The feedback from China … is that people are going back to work, but they’re not necessarily going out on the town. So they’re staying home and they need entertainment – gaming should be a key beneficiary of that trend,” she said.

“That confirmed a thesis we were thinking about anyway, that we might see some permanent changes in behaviour.”


Price movements have put such bets in the black, but cash flow data paint a more complex and cautious picture.

Alibaba is up about 10 per cent from lows a few weeks ago, while Amazon and Activision have seen similar rallies.

Some US$7-billion in funds flowed in to Chinese equities through the second half of March, according to EPFR Global, the biggest two-week surge in five years.

Yet that came with exchange data showing record outflows for the month as a whole, and with analysts ringing alarm bells that China’s economy likely shrank in the first quarter for the first time in 30 years.

Story continues below advertisement

Bank of America on Thursday cut its full-year growth forecast for China from 1.5 per cent to 1.2 per cent – compared with 6.1 per cent for 2019 – forecasting a deeper and longer slump in global demand.

“You can say China is operating back to normal but it doesn’t operate in self-isolation,” said Kunjal Gala co-portfolio manager, Federated Hermes, who has added a little to positions in China and South Korea, but cautiously.

“Both of these countries are not safe, as both have bet on exports, and with the U.S. and Europe slowing down because of this lockdown, demand is going to be fairly subdued.”

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies