Tesla is building Gigafactory 3, one of the world’s largest auto plants,
in Shanghai, to serve a burgeoning Chinese customer base. Apple has
more iPhone users in China than in the U.S., and GM sells more cars
in China than stateside. Last year, Starbucks announced plans to more
than triple its revenues in China—currently estimated at around 20% of
total sales. McDonald’s promises 2,000 new restaurants by 2022. And
Yum China—headquartered in Shanghai but incorporated in Texas—is
China’s largest restaurant company. Its Kentucky Fried Chicken and
Pizza Hut brands are the country’s leading quick-service and casual-
dining eateries, respectively, and Yum is pursuing a long-term goal of
expanding its store count from its current 8,900 to 20,000.
S
O WHERE HAS SHAN been reaping his gains? From the start,
PAG has focused on businesses that cater to consum-
ers and require relatively little capital to grow. Some of
its earliest successes were outside China. PAG was a big
investor in the Universal Studios theme park in Osaka,WEIJIAN SHAN
Stocks That RideChina’s Spending WaveTO PROFIT from China’s
booming retail sector,
investors’ best choices
are domestic companies
that do most or all of their
business in the nation—
many of which are listed
on U.S. exchanges.
Jason Nogueira, port-
folio manager for T. Rowe
Price’s Global Consumer
Fund, likes top names
in consumer staples
that are fast, consistent
growers. He recommends
Mengniu Dairy (trades
in Hong Kong, U.S. $4).
Another promising choice:
Yum China (YUMC, $43),
the operator of Kentucky
Fried Chicken and
Pizza Hut.
For bargain-priced
stocks, the best bets are
cyclical companies suf-
fering from angst over the
trade war and the govern-
ment’s squeeze on credit.
A housing downturn has
hit the appliance sector,
but as consumers become
more affluent, they’ll re-
vive growth in residential
construction. Gree Elec-
tric Appliances (Shen-
zhen, $9) looks attractive
at a P/E of just 14, as does
rival Midea (Shenzhen,
$8) at 17. A slowdown in
business travel and belt-
tightening by families
have hampered the travel
sector. To play a rebound,
Trip.com Group (TCOM,
$35), a provider of online
reservations, package
tours, and corporate
travel management, is a
good bet, as is hotel giant
Huazhu (HTHT, $37).THE E ARLY
BIRD
GETS THE
WORM.
EARLY
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