Health and happiness: The new investing theme

November 13, 2015 14:33
Wang Jianlin (L) and Jack Ma seen on stage together at an event organized by CCTV in 2012. The two tycoons have been actively investing in entertainment and health-related ventures. Photo: CNSA

A month ago, a well-known investment columnist asked a group of visiting financial journalists to name one industry that is a sure-shot bet in terms of prospective returns for investors.

Rather than a flurry of answers, there was dead silence in the room.

None of the reporters dared to put forth their views as they didn't want to embarrass themselves in front of a man who has been offering investment advice to his readers for 40 years.

Well, we can understand their hesitation, given the uncertainty surrounding most sectors.

Traditional industries such as banks and property in Hong Kong and China are not doing too well, commodities are drifting and retailers have suffered a sales slowdown. 

With other major sectors too lacking momentum, the Hang Seng Index has been basically unchanged compared to a month ago.

To make matters worse, a US rate hike is on the cards next month.

Given all this, what should investors do now? And what are the themes they should pursue?

To get some ideas, they could start by looking at the firms that have managed to outperform recently. Winners aren't difficult to spot even in the current hazy environment.

Apple, despite slow 6S sales, has been doing extremely well especially in China, and so has Nike, which reported 30 percent jump in quarterly sales in the Greater China region. Starbucks has on average been opening three stores in China every two days this year.

So things are perhaps not as bad as they look.

This week Alibaba reported 60 percent surge in Singles' Day sales to US$14.3 billion, a new record for the annual Nov. 11 shopping festival. 

In an interview given to the media following the record sales, Alibaba's founder and Chairman Jack Ma said he will pursue more investments in the "double H" industry – that is, those related to people's health and happiness.

It was not the first time that the e-commerce entrepreneur has outlined such ambition.

It is worth bearing in mind that Ma had created healthcare entity Ali Health (0241.HK) and digital entertainment firm Ali Pictures (1060.HK) before listing Alibaba Group last year.

Both the group affiliates had market values in excess of HK$50 billion, while year-to-date returns have been in the 20-50 percent range.

The health and happiness theme, meanwhile, is also apparent in the initiatives being taken by Wanda Commercial chairman Wang Jianlin, China's richest tycoon who made headlines earlier this year for investing in a football club in Spain

During a Harvard University lecture last month, Wang identified three industries that he said were particularly promising – entertainment, sports and tourism.

Especially sports industry, a health-concept business which the tycoon believes has the potential to grow multi-fold from the current level.

"This is especially so if we look at contemporary China, where we pursue health and longevity. So the sports industry in China has a bright future, absolutely," Wang said.

He advised the youth that if they "study marketing, economics or media in the field of sports, this will be very useful as current talent in those areas is scarce."

Taking the cue from comments of Wang and Ma, entertainment stocks, especially those associated with movie-related ventures, have enjoyed a good rally this quarter.

Expectations of 50 percent growth in mainland box office revenues this year and hype surrounding the upcoming release of the latest Star Wars movie have added momentum to the sector.

Let's not forget that movies are the cheapest form of entertainment that people can happily afford.

So try to invest on health and happiness – it can be fun as well as rewarding.

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EJ Insight writer