3 Stocks That Could Benefit From China’s Growth And Changing Consumer Tastes

China’s economic numbers appear to be improving.

The Shanghai Daily reported a few days back that the Caixin China Purchasing Managers’ Index (PMI) for manufacturing – which covers operating conditions for private and export-oriented manufacturing companies – improved from 48.0 in February to 49.7 in March.

Meanwhile, the official manufacturing PMI, which covers large Chinese state-owned enterprises (SOE), grew from 49.0 to 50.2 over the same period. Any PMI reading above 50 represents expansion and the official manufacturing PMI’s March number is the first time that expansion has happened in eight months.

It’s not just manufacturing that had improved in China. Services activities – as gauged by the Caixin Business Activity Index – had also expanded from 51.2 in February to 52.2 in March.

Important insights on Chinese consumers

Banking outfit Credit Suisse had recently released survey results on consumer confidence in China. What the survey found is that despite concerns over China’s economic health, consumers in the country continue to have high confidence in the growth of their income and personal wealth.

Strong consumer confidence is not the only thing to note about Chinese consumers: Their preferences have also been evolving. They are now placing less emphasis on products and more value on services such as leisure and healthcare, according to a recent McKinsey study.

Chinese business, Singapore stocks

The nascent recovery of Chinese economic numbers and strong consumer confidence could help assuage worries about the health of the Chinese economy. This, along with the changing consumer preferences in China, could be potential tailwinds for a number of Singapore-listed stocks.

Let’s look at three such companies, in no particular order of merit.

The first is Global Logistic Properties Ltd (SGX: MC0), which has a market capitalisation of S$9.3 billion. The company is a provider of modern logistics facilities and 59% of its assets are based in China. In the four countries that the company is operating in (China, Japan, Brazil, USA), it has a leading market position in three of them (China, Japan, and Brazil). As of 2 June 2015, Global Logistic Properties counts GIC, one of the Singapore government’s investment arms, as its single largest shareholder.

The second company is Straco Corporation Ltd (SGX: S85). Investors in Singapore might know it as the company that owns and runs the Singapore Flyer, but the company also has important business assets in the form of two aquariums in China, namely, the Shanghai Ocean Aquarium and Underwater World Xiamen.

The third company, Tianjin Zhongxin Pharmaceutical Group Corporation Limited (SGX: T14), is somewhat special as it is the only Chinese company that has listed both S-shares in Singapore and A-shares in China. Tianjin Zhongxin is a manufacturer of traditional Chinese medicine (TCM) products. If consumers in China will gradually pay more attention to their healthcare needs, then that’s a trend that Tianjin Zhongxin could potentially ride on.

A Foolish takeaway

All that being said, it’s worth noting that the aforementioned macro-trends in China (China’s improving economic numbers, strong consumer confidence, and shifting consumer preferences) can easily reverse course. Also, even if they do become lasting trends, there’s no guarantee that Global Logistic Properties, Straco, and Tianjin Zhongxin can benefit too.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat does not own shares in any companies mentioned.