China to drive private market opportunities in Asia as healthcare, consumption offer pickings: HarbourVest

Demand driven by China’s demographic shifts, consumption downgrades and supply chain diversifications, have investment implications for the region: HarbourVest

India and Southeast Asia will gain from shifts in lower-end supply chains, and Japan and South Korea will benefit in high-end manufacturing, the private markets firm says

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People dine at the Fushansuo Market in Shinan District of Qingdao, east China’s Shandong Province. Photo: Xinhua

Published: 3:00pm, 11 Feb 2024

Private markets firm HarbourVest sees investment opportunities in Asia including China’s healthcare services and consumer industries, with the country’s declining demographics and uptick in retail spending lifting demand for related products.

Trends like the reshuffling of global supply chains in the year ahead will also throw up opportunities in Japan and South Korea in high-end manufacturing, while regions like India and Southeast Asia will benefit in more labour-intensive industries like textiles.

“We think that Asia will see very good growth in 2024, and that growth is very much underpinned by China,” said Kelvin Yap, managing director at HarbourVest, a global private markets firm with over US$117 billion in assets under management. China, Asia’s single largest economy, will grow at around 5 per cent, “a very high number,” he added.

Healthcare services will be a main area of focus for HarbourVest’s China investments this year, as the country’s ageing population and growing household income drive demand for “more premium and better healthcare services”, including outpatient treatment and elective surgeries.

An elderly man is being escorted by medical staff during rehabilitation training at a rehabilitation sports function room of the Wuyang Street Community Health Service Center in Deqing County, Huzhou, China. Photo: Getty Images

Consumption will be another key investment theme for the firm, despite muted confidence and a slow rebound in spending in recent years. “I know consumption has not exactly bounced back, but if you look at big-ticket items such as motor vehicles, sales are actually at an all-time high, suggesting that there is still buying power,” said Yap.

He also pointed out that a trend towards “consumption downgrades”, where pessimism about the country’s economic outlook is making consumers adopt a more frugal lifestyle, will be more than compensated for by an uptick in volume, which will in turn drive up the total value of consumption.