Global investor Dan Arbess: Buy the beaten up BATs — Baidu, Alibaba and Tencent — despite the Trump-China trade war

Published Tue, Sep 4 201812:50 PM EDT

Chinese internet giants Baidu , Alibaba and Tencent — nicknamed the BATs — are the "gateway" to the world's second-largest economy, global investor Dan Arbess told CNBC on Tuesday. "Regardless of what happens in trade, the best idea that I've got right now, as a stock idea, is the BATs: the Chinese equities, Baidu, Alibaba, Tencent," said Arbess, CEO of money management firm Xerion Investment and former partner at the global advisory and asset manager Perella Weinberg. "I'd just buy more because they are dirt cheap relative to their comps, and much more comprehensive. They've got social media, e-commerce, payments, gaming, finance all wrapped into one. They are entire ecosystems," he said. Those services are among the most coveted by the up-and-coming young Chinese consumers, he added. "They are dominating the choices of what goods and services get into the Chinese economy and the Chinese millennial consumers. They are literally the gateway to China." Millennials in China, born in the 1980s and 1990s, number 415 million, according to a 2015 Goldman Sachs report . That's about 31 percent of the entire population there and far surpassing all 325 million people who live in the United States. The 87 million millennials in the U.S. account for about 27 percent of the population. However, U.S. millennials have far more money at their disposal, with an average annual income of nearly $44,000 compared to their Chinese counterparts who only make on average about $6,000 per year. U.S. millennials total income amounts to $3.8 trillion compared to $2.4 trillion for their Chinese counterparts. Despite that income disparity, Chinese millennials are going to lead China's economic growth of the future, Arbess said, arguing that Beijing is making great strides in transforming its economy to be more consumer driven. "Do not underestimate the power of China and their long term arc." In 2017, consumption accounted for 58.8 percent of China's economic growth, according to the state National Bureau of Statistics. In the first half of 2018, UBS pointed out the consumption number went to 78.5 percent despite the U.S.-China trade headwinds.

Daniel Arbess

Olivia Michael | CNBC

Chinese internet giants Baidu, Alibaba and Tencent — nicknamed the BATs — are the "gateway" to the world's second-largest economy, global investor Dan Arbess told CNBC on Tuesday.

"Regardless of what happens in trade, the best idea that I've got right now, as a stock idea, is the BATs: the Chinese equities, Baidu, Alibaba, Tencent," said Arbess, CEO of money management firm Xerion Investment and former partner at the global advisory and asset manager Perella Weinberg.