China’s Slice of This $48 Billion Fund Just Keeps Getting Bigger

John Pearce has returned to Sydney from a week in Hong Kong beaming, with one clear message of where to invest his next dollar: China.

The chief investment officer who’s in charge of A$60 billion ($48 billion) at Australian pension fund UniSuper Management Pty expects returns in Asian emerging-market equities to beat developed economy peers, extending an outperformance that’s already underway. The main reason: Chinese firms are driving profit growth set to exceed that in mature stock markets as it’s coming from a lower starting point.

UniSuper is joining some of the world’s largest investors who say the two-year rally in emerging-market assets has further to go. Franklin Templeton to BlackRock Inc. are among money managers betting that developing-nation stocks and bonds will continue to appreciate as they catch up from more than half-a-decade of underperforming U.S. assets.

Pimco, BlackRock See Multi-Year Rally as Emerging Markets Rev Up

China’s management of its economy is also making Pearce more comfortable. He recently allowed his money managers to invest in mainland Chinese equities directly for the first time in the firm’s history.

Some 2,300 Communist party delegates gather next month in a twice-a-decade meeting that will provide President Xi Jinping with his biggest opportunity to reshuffle scores of top government positions. Pearce questioned the stance taken by some banks advising caution before the conclave.

“It’s a red herring,” Pearce said in an inteview in Sydney on Friday. “Everyone doubted President Xi Jinping’s willingness to look at structural reform before this party congress, but he’s been doing it. He’s already well on the way.”

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