OREANDA-NEWS. August 15, 2014. Clean energy could grow into one of the biggest industries in China, according to Wells Fargo’s Anthony Cragg.

He believes investors are overly pessimistic about the slowing Chinese economy and there are still attractive opportunities in this fast-growing sector, as well as technology.

Cragg (pictured) is balancing these twin ‘new economy’ themes with ‘old economy’ plays, such as buying into out of favour financials in his Wells Fargo China Equity
fund.

He said the country has the ‘world’s biggest problems environmentally’. This means there is potential to see the relatively fledgling clean energy sector become a significant portion of the stock market.

‘Environmental issues are taking centre stage in China and the government is absolutely committed to doing something about it,’ he said. ‘The most significant is the move from coal-generated power production to alternative energy, including nuclear, wind, solar and the efficient use of fuel over the next five to 10 years.’

Solar power output is rising by 20% a year and Cragg has been playing this through a holding in China Singyes Solar Technologies Holdings. ‘The company’s shares have outperformed because of strong government support of the solar industry and China Singyes’ ability to build plants quickly,’ he said.

‘We believe the company is well positioned to be a long-term beneficiary of the clean energy movement. Demand for solar in Europe declined rapidly when they took away the subsidies, but the demand is huge in China.’

Playing ecommerce

Similarly, ecommerce demand is rising rapidly and he has holdings in online conglomerate Tencent and Sina Corp. Although both suffered pullbacks earlier in the year as social media stocks sold off globally, Cragg remains a long-term backer of the sector.

He expects the upcoming flotation of Alibaba in the US to reignite interest in the internet and said he will take part in the initial public offering if the valuation is ‘realistic’

‘It is an extremely strong business that is dominant in Chinese ecommerce and it has such a massive footprint, it has been able to move into financial services and other areas,’ he said.