Many Firms Are Underinvesting in China, Carlyle CEO Lee Says
(Bloomberg) -- Many corporate and investment leaders are underexposed to the Chinese market, according to Carlyle Group Inc. Chief Executive Officer Kewsong Lee.
Lee, speaking Wednesday at the Bloomberg Invest virtual conference, said that while the region has always had “short-term bumps,” the conversation should be about the best way to invest in China and not whether to invest.
“There’s more opportunity in that region of the world than not, especially since valuations have corrected a bit,” he said. “The mindset needs to be one of very long term, to be consistent and to be committed.”
Recent political upheavals in China have stunned global investors and led to declines for many of the nation’s biggest stocks. Beijing’s sweeping anti-monopoly probes against Big Tech, cybersecurity reviews for foreign listings and a decision to ban profits in after-school tutoring companies sent shock waves through global financial markets.
At Tuesday’s sessions at the Bloomberg conference, representatives of Man Group Plc, Soros Fund Management and Elliott Management raised concerns about the outlook for Chinese stocks traded in New York and in Asia. “We are not putting money into China right now,” Dawn Fitzpatrick, chief investment officer at Soros, said.
Not everyone agreed. Also Tuesday, Blackstone Inc. President Jon Gray said China “will continue to grow faster than the developed markets.”
“They’ve got a very entrepreneurial culture, they’ve got a government that wants economic growth to improve quality of lives, and I think that means, broadly speaking, that China should do well,” Gray said.
Here are some other highlights from the interview with Lee:
- “A little bit of inflation is not the worst thing in the world and we are very focused in on it. I’m much more worried about the impact on interest rates and valuation multiples. Certainly asset prices are incredibly high”
- No one can make sense of environmental, social and governance data because of a lack of defined metrics for tracking performance, said Lee. That’s why Carlyle teamed with other private-equity firms and investors to standardize such measures. The aim is to drive better performance at companies, he said
- Carlyle successfully opened its New York and Washington offices several weeks ago and has hosted cocktail events with the firm’s limited partners. For staff, the firm embraced a hybrid work environment and has mandated Covid-19 vaccinations.
©2021 Bloomberg L.P.