This Friday is Black Friday. It’s the day following American Thanksgiving, the ‘official’ start of the Christmas shopping season and a big thing in the US.
Last year, Americans spent more than $5bn (£3.7bn) shopping online on Thanksgiving Day and Black Friday, and a further $3.4bn (£2.7bn) on ‘Cyber Monday’ .
It's also getting more traction in the UK: last year, after a bit of pushing and shoving in the local supermarket trying to grab a cheap TV, us Brits spent a cool £1.23bn on 'bargains'.
But all that is dwarfed by Chinese Single’s Day, an annual online shopping event that is unrivalled in the world and which was celebrated a little earlier this month. China is now home to the world's largest e-commerce market, estimated at $1.2trn , while consumption-related services account for 90 per cent of the country's GDP growth.
Alibaba, its largest e-commerce giant reported that retail sales on its platforms amounted to $25.3bn over the 24 hours. It was a 39 per cent increase on last year, and that’s just one company.
Chinese companies are some of the most pioneering in the world when it comes to identifying and exploiting new business models. As its middle class expands, the potential for growth in Chinese consumer spending is enormous. With a population of approximately 1.4 billion people today (more than four times the size of the US) and approximately 400 million millennials making upwards of 40 per cent of their purchases online, the future looks exciting.
An investment trust that is using this theme effectively is Fidelity China Special Situations. Manager Dale Nicholls believes Chinese millennials are one of the main driving forces.
The ‘jiulinghou’, as they are called there, are ‘digital natives’, and they exhibit very different priorities to their parents.
Instead of looking to simply improve their basic standards of living, this generation is more interested in the finer things in life and have access to greater disposable income at a younger age.
Regulatory restrictions also make it difficult for Western tech giants to gain ground in the market. So local brands are having a field-day. Baidu, Alibaba and Tencent (BAT) dominate, but there are many more.
Chinese companies are some of the most pioneering in the world when it comes to identifying and exploiting new business models, especially when it comes to mobile apps. From bicycle sharing in urban areas, through to live-streaming, the innovation and ideas are plentiful.
Fidelity China Special Situations invests predominantly in companies listed both domestically in China and on the Hong Kong Stock Exchange. Mr Dale is able to make use of Fidelity's investment licences in China, which are among the largest of any international investor, offering investors direct exposure to the China growth story.
He can also invest in Chinese companies listed on other exchanges around the world, unlisted companies and those with significant interests and primary revenue exposures in China.
Mr Dale has managed the trust since April 2014. He has extensive experience in the far east and this, coupled with the breadth and depth of Fidelity’s resources in this region at his disposal, makes this trust an attractive proposition for investors looking for exposure to the Chinese market.
Due to its bias towards smaller and medium sized companies, it is not for the faint-hearted and investors should be prepared for large fluctuations in the value of their investment. But those willing to take the risk could be handsomely rewarded over the long term.
Darius McDermott is managing director of FundCalibre
