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Thoughts on China re wine, solar & resources

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Thoughts on China re wine, solar & resources

Hi MM, Good work thus far. Three questions - i) With the upcoming tariff removals on Australian wine to China, what is your view on TWE? Considering the recent news on wine oversupply/rout, what is MM's view in the short to medium term? ii) China leads in solar panel manufacturing and solar energy generation. According to Bloomberg, China added 216 gigawatts in 2023, that beats the US's entire fleet of 175 gigawatts, that is, one year's added solar energy is more than US' entire fleet of solar energy. Is there a way AU investors can take advantage of this renewable ride? iii) MM mentions frequently and aligns its trades with Resources on the prospect of China's economic recovery, are there other ways AU investors can partake? eg IZZ? Is MM looking at other sectors? Thanks, Jacky


Hi Jacky,

  • Treasury Wine (TWE) – MM remains long and bullish on TWE but we believe a lot of the recent good news out of China was already built into the stock hence a period of consolidation between $12 and $13 wouldn’t surprise.
  • Solar – this is not an area where we focus at the moment due to the lack of local specific stock opportunities, but the ASX listed BetaShares Solar ETF (TANN) may be worth investigating. We do own First Solar (FSLR US) in our International Equities Portfolio.
  • Resources –  our portfolios do have resources exposure and hence are China facing to a degree but it’s only the iron ore stocks that have noticeably struggled in 2024, e.g. BHP Group (BHP) -14.6% and Mineral Resources (MIN) -3.2%. When we are convinced, China has turned the corner MM is likely to increase our BHP position. Conversely our copper position in Sandfire (SFR) has enjoyed success with the stock hitting 5-year highs this week. Lastly, our “bottom picking” in Pilbara (PLS) and Iluka (ILU) are net ahead but time will tell if we correct. There are a range of ETFs where one can get exposure, but we like the purity of direct stocks.
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Treasury Wines Estates (TWE)
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