James Morton’s January letter is now available on the Perinvest website. One of the fund’s current holdings is 361 Degrees, a leading tier two domestic sportswear brand in China. The letter highlighted some interesting trends in China’s sports industry (some of the data and insights are actually based on a report published by KGI, the Taiwanese broker):

• China’s sports market is predicted to grow faster than overall GDP growth over the next decade
  • China’s sports market was ~1.9% of GDP in 2015 but is projected to reach ~3% by 2025, which is closer to the level of South Korea and the United States
• The Chinese population is ageing but consumption power will likely get stronger over time as incomes rise
• Soccer and skiing predicted to be the fastest growing sports in China
  • Starting from a small base today, drivers include growing demand for recreational sports as well as strong government policy support
  • Re football, “Chinese companies have already invested US$1.5bn into European football leagues and put over US$2bn on offer to targeted European clubs.”
  • Skiing should also see strong growth ahead of the 2022 Winter Olympics in China
    • The number of ski resorts in China grew ~10x from 2000 to 2015 and total skier visits increased ~20x (to 12.5m) over the same period
    • Apparently, China contributed ~60m (!) skier visits to US ski resorts in the 2015/16 season, so supply seems more of a constraint at this point

For more on the fund, see my previous post here covering their review of 2016 and outlook for 2017.