Looking into the Future
COVID-19 may lead to social instability in some countries, but the prospects for the China market remain strong for many reasons, says Louis SO, Co-Chairman of Value Partners Group. As a leader of the first and only asset management firm listed on the Main Board of the Hong Kong Stock Exchange, So is about to harness the new opportunities in a post-COVID-19 environment.
It wouldn’t be a stretch to say that the onset of the COVID-19 pandemic has led to the worst global economic crisis since the Great Depression of the 1930s. The combination of a demand shock, a supply-side shock, a financial shock, and political upheavals, has sent the world’s markets reeling.
While no one can predict how the world’s economies will emerge from the crisis, some experts are making educated guesses based on current economic data. Louis So, Co-Chairman and Co-Chief Investment Officer of asset manager Value Partners Group, believes that whatever happens, a post-COVID-19 environment is going to be very different to anything in the past. “China will certainly be outperforming other markets, though it may not drive the growth of the global economy,” he says.
So believes that there will be a higher degree of government intervention, a greater deal of money printing, very low interest rates, and a much bigger asset bubble. This asset bubble is set to widen the rich-poor gap, and this will lead to social instability, he thinks.
“At some point, this system will collapse. Going forward, politically speaking, left-wing politicians will gain popularity and they win support. We then think that a redistribution of wealth will happen,” he says.
So points out that although the last 50 to 70 years have seen a period of global wealth accumulation, there were also periods when wealth was distributed. Such events occurred because of wars, or because governments allocated resources differently. So believes that this is something we can expect to happen in the world during the next five to ten years.
On the consumer side, So believes that there will be a contactless economy consisting of a boom in e-commerce and online entertainment. Value Partners Group has positioned its portfolios in a way to benefit from this trend.