EXS Capital’s Solberg: China’s Property and Steel Sectors Look Interesting Now (CMN)

Eric Solberg, the founder and CEO of Asia-focused private equity and wealth management firm EXS Capital, was recently interviewed by the China Money Network. In the interview, he commented:

…we think there will be a lot of distressed situations in China. The challenge is always the fear of “catching the falling knife.” We are less afraid of that because of our business model. We don’t have to wait for the bottom. We want to find good assets and good management team. We think a number of sources of capital for Chinese developers, such as bank debt, shadow banking, RMB-denominated private equity funds and dim sum bonds (or domestic and foreign equity markets), are drying up at the same time. As a contrarian investor, China is interesting to us again.

He latter commented:

A lot of people are coming to the conclusion that China has a two-speed economy now. Things like e-commerce and healthcare are growing very fast. Another realm such as steel, manufacturing and construction are growing very slowly. As a contrarian investor, we are seeing good value in those slow-growing sectors….

…Now, we are looking at the steel industry, which is tremendously distressed with lots of overcapacity. The government desperately wants to consolidate this. I think there will be quite a lot of pain, a lot of bankruptcies and non-performing loans (from this sector). But ultimately, China will continue to be one of the most powerful and competitive steel producers in the world. China’s domestic steel consumption will still be huge.


To read the interview transcript, Eric Solberg: China’s Property And Steel Sectors Look Interesting Now, go to the website of China Money News.

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