Chapter two: What's your next move in China investing?

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Some of the most exciting long-term equity opportunities have been in the healthcare sector as we believe Chinese healthcare expenditure will continue to grow at double digits (Chart 3). We are positive in the long run on select leading pharmaceutical companies with rich innovative pipelines to diversify from the impact of reduction in drug prices, as well as Contract and Research Organizations (CROs) which are gaining international recognition in new, advanced drug therapies such as cell and gene therapy.

In the financials sector, there is great potential in the insurance segment and wealth management services as the country continues its decades-long transition from low income to affluence. We believe the need for these financial products and services is somewhat nascent and can become significant with time, given the progression is structural in nature. While part of China is still in lockdown, we believe that when it does eventually open up, investing in the banking sector will be an attractive way to participate in the reopening.