China’s Covid-19 lockdowns have lasted longer than expected, affecting the economy and investor confidence. Despite this, we continued to buy high-conviction companies at more attractive valuations, as we viewed the near-term weakness as temporary.
The country’s structural drivers remain intact, even if we don’t return to the heady growth of 10 to 20 years ago. The companies we invest in should benefit from trends such as rising incomes and wealth, increasing demand for premium goods and services, and growing sophistication in technology and manufacturing. See chart 1 for an illustration of how a long-term trend can endure.
