Magellan founder Hamish Douglass backs China investing

Magellan founder Hamish Douglass says it’s more risky not to invest in China than to be put off by trade war tension.

Hamish Douglass, of Magellan Financial Group. Picture: Hollie Adams

Magellan founder and chief Hamish Douglass said it’s more risky not to invest in China than to be put off by any trade war tension.

Speaking to The Australian Strategic Forum, Mr Douglass said he is more concerned by Elizabeth Warren becoming president, or UK political uncertainty than geopolitical risk in China.

“China’s rise is not going to stop, and if you take a long-term view, that is one of the most important investment locations on the planet,” he said.

“To pass on investing in China is risky from an investment point of view. You will miss out on one of the biggest investment areas.”

He noted that the growth of China’s middle-class is a key investment focus, with leverage through e-commerce powerhouse Alibaba - one of the fund’s biggest holdings alongside Microsoft.

He said his investment in Alibaba is for a long-term horizon, and “any short-term trade war risk is not going to offset that”.

Weighing up the stock’s potential regulatory risk, he said it was less of a concern than the regulation facing other key holdings such as Facebook or Alphabet.

Mr Douglass said there was strong potential for Starbucks as it plots growth across an increasingly urbanised China, with potential for as many as 30,000 stores in the country over the next 10 years.

“We take very long-term views. We invested in Yum Brands 10 years ago because of their China business and we have made seven times our money on that investment... Starbucks feels like Yum was 10 years ago.”