Man GLG's Lagrange Sees China Slowing for Another 18 Months

  • Real estate, social spending cuts contributed to slowdown
  • Lagrange sees opportunities in healthcare, Internet companies

China’s economic slowdown will continue for as long as 18 months amid a real estate slump and an oversupply of industrial goods, according to Pierre Lagrange, co-founder of hedge fund GLG Partners and the chairman of Man Group Plc’s Asian business.

Investors are punishing all Chinese companies because of the weaker growth, creating opportunities to invest in health care and Internet businesses, Lagrange said in a Friday interview with Caroline Hyde on Bloomberg Television. Real estate, social spending cuts and a clampdown on corruption have contributed to a difficult period for expansion, he said.

“Everything has been tarred with the same brush, which is typically good value for us because you can then find great growth factors at relatively good multiples,” he said. “There is a lot of headroom” for e-commerce sales growth in China, he said.

Retail Spending

China’s economy grew 6.9 percent in the third quarter from a year earlier, the slowest quarterly expansion since the first three months of 2009. Internet retail spending in China is forecast by advisory firm Forrester Research Inc. to grow at a compound annual rate of nearly 20 percent until 2019, when it should exceed $1 trillion.

In Europe, stimulus provided by the European Central Bank “is probably going to be more than expected,” Lagrange said, without being more specific. While that risks creating asset bubbles, the region has little choice except to “throw money at the problem.”

Man Group, the world’s largest publicly traded hedge-fund manager, is drawing more investors to its funds as market volatility rises. The company reported net inflows of $1.4 billion for the third quarter as clients backed its computer trading funds. Man Group acquired GLG Partners in 2010.

Man Group managed $76.8 billion at the end of September, of which 31 billion was invested in its GLG funds that bet across asset classes. The remainder is held in its computer driven AHL funds.

Lagrange said while machines are beating humans in certain hedge fund strategies, portfolio managers still have an edge when it comes to picking good stocks.

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