As U.S. - China trade tensions continue to weigh on markets, Fidelity International tells investors to focus on the long-term drivers for China’s growth. 

Despite the increased volatility in markets arising from the trade tensions, Raymond Ma, China equities portfolio manager at Fidelity, is maintaining an overweight on «New China» sectors, as they are less sensitive to short-term macroeconomic headwinds.

«China is migrating toward the fourth industrial revolution, or Industry 4.0, which comprises the introduction of smart technologies and autonomous machinery. The country is especially advanced in robotics and manufacturing but has room to develop its semiconductor capacity, though it is nurturing its homegrown capabilities,» said Ma, who was speaking at the firm's investment conference held in Singapore on Thursday. 

Push and Pull Factors

The development of automation and robotics are providing opportunities as long-term structural factors such as rising average wages and a shrinking working population in China are pushing the development and adoption of new innovations, he explains.

On the other side, pull factors such as increased efficiency and accuracy of machine learning predictions are driving demand. For example, a dairy farmer can now use machines to predict a cow's conception success rate with close to 90 percent accuracy, versus 65 percent for human experts. 

Asia outlook

Asia is unlikely to reap the same benefits of China stimulus going forward as the country’s willingness to act in the face of a slowing economy becomes more measured, said George Efstathopoulos, multi-asset portfolio manager at Fidelity International. 

Despite this, Fidelity International’s multi-asset team remains positive on Asia risk across the capital structure, believing that accommodative monetary policy should provide a boost to fundamentals. «With the Fed turning dovish this year and other key central banks extending their lower for longer policy — and inflation across developing and emerging markets at persistently low levels — Asia’s central banks can afford to ease rates.»