First State Investments has established a sterling share class in the First State Greater China growth fund, making it available to UK investors for the first time.
The fund invests a range of companies in the People's Republic of China, Hong Kong, Taiwan and Macau. It will be managed by Martin Lau, who joined First State in 2002. Lau started his career in 1995 with the risk management team at BZW and then spent six years as a fund manager with Invesco, where he was responsible for the Greater China funds, smaller companies fund and regional portfolios. He joined First State in 2002 and was appointed to his current position of director, greater China equities in 2003.
China has grown rapidly since economic reforms started in 1978 and improvements in the quality of management and accountability have produced better companies.
In First State's view, two of the biggest sources of growth in China are foreign trade and investments. These factors have been helped by having strong Chinese brands of exported goods and membership of World Trade Organisation.
The region also looks bright because domestic consumption is increasing, with the emerging middle class increasing demand for cares, education, healthcare and properties, which is fuelling increase in these industries. The growth is also spreading to Hong Kong, which is benefiting from economic reforms in China.
Meanwhile, Taiwan is experiencing growth due to its electronics and information technology businesses. These have low production costs and are flourishing due to domestic trading relationships and with Europe and the US.
However, while the area is arguably not as risky as it once was, the region can still be volatile and the fund may be more of interest to investors with an appetite for risk.
According to Standard & Poor's the First State greater China growth fund is ranked third out of 38 funds based on £1,000 invested on a bid-to-bid basis with gross income reinvested over one year to October 11, 2004.