By Jeffrey Hodgson
HONG KONG (Reuters) - Coal producers and insurers, both poised to profit from China's energy-hungry but aging population, are among the best potential China plays for global investors, a Mirae Asset fund manager said.
But the country's big banks and oil companies should be approached with caution, given their less impressive profit outlook, Li Cong, manager of the $2 billion Mirae Asset China Solomon Fund, said late on Tuesday.
"With the banking sector, I think the growth will be very high for the next few years. But I more prefer the medium-sized banks like China Merchants Bank (3968.HK: Quote, Profile, Research, Stock Buzz) (600036.SS: Quote, Profile, Research, Stock Buzz)," he said during the Reuters China Century Summit in Hong Kong.
"Markets leaders like ICBC or CCB (China Construction Bank) (0939.HK: Quote, Profile, Research, Stock Buzz), fundamentally they are very good, but in terms of the stock performance, you need smaller banks where growth might be higher."
Mirae Asset, one of South Korea's largest mutual fund managers, has $51 billion of assets under management at its fund management arms.
The China Solomon Fund, held mainly by the country's retail investors, has returned 72 percent since its launch in March, 2006, compared with a 65.9 percent rise in its benchmark, the MSCI China Index .MSCICN.
The fund's largest holdings at the end of July included China Life Insurance Co. (2628.HK: Quote, Profile, Research, Stock Buzz) (LFC.N: Quote, Profile, Research, Stock Buzz), China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz) (CHL.N: Quote, Profile, Research, Stock Buzz), Ping An Insurance (2318.HK: Quote, Profile, Research, Stock Buzz), Industrial and Commercial Bank of China (1398.HK: Quote, Profile, Research, Stock Buzz) (601398.SS: Quote, Profile, Research, Stock Buzz) and China Merchants Bank.
China Life, the country's top life insurer, last month posted a 160 percent increase in first-half profit, topping forecasts, on the back of stock-infused investment gains and rising premiums. Continued...
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