Ming Tan began his career on the buy side, an experience he says taught him that everything has a fair price. He asserts that this perspective helped him decide to buy Chinese banks this year when everyone else was running for cover in insurance.
“We made a pretty good call this year in terms of positioning investors where they should be in terms of banks versus insurance in China. In June everybody was almost universally bearish on the Chinese banks and universally bullish on the insurance and we pointed out our views which were contrarian,” says the leading diversified financials analyst.
In June, he upped his allocation from five buys to eight buys on Chinese banks, in particular smaller lenders, in a move that attracted a lot of attention and debate.
“That was good in terms of bringing out the issues and having the discussion. We were maximum bullish and the sector has rallied quite hard since then so that was something that took a lot of investors by surprise,” says Tan.
As China’s regulatory and financial framework evolves there will undoubtedly be some moments of turbulence in the country’s banking sector, but Tan’s advice is to hold tight.
“There will be a lot of moving parts but we were quite encouraged by how the banks are responding to the challenges they face,” he says. “There’s a lot more pricing discipline than investors give the banks credit for.”