There are plenty of attractive opportunities to be found in China and concerns about economic growth mean potential gems are being overlooked, an investment house argues.

There are plenty of opportunities to buy attractively valued companies in China, a task made easier because of the mass of often negative headlines about slowing economic growth in the Asian giant, M&G Investments said in a note.

While much media and analyst commentary focuses on China’s slowing pace of gross domestic product and concerns about strains in the financial system, the country’s government is grappling with reforms and has the money to make change happen, Matthew Vaight, emerging markets fund manager, said in a note.

As a result, there are plenty of attractively-priced companies to be found that are being overlooked in such an environment, he said.

“We believe there will be opportunities arising from the fact that China’s economy is in transition. The old model relied on low-cost manufacturing, but China is no longer a cheap place to manufacture as rising wages are eroding its competitiveness. We are excited by the number of companies that are adjusting to this challenge. We see firms moving up the value chain and focusing on high-quality, sophisticated products,” Vaight said.

The world’s second-largest economy grew by 7.4 per cent last year, which is the slowest rate since 1990. The MSCI China Index of the country’s shares shows total returns (capital growth plus reinvested dividends) of 1.8 per cent so far this year. During 2014, that index showed returns of almost 8 per cent.

“In the future, we expect to see more Chinese brands asserting themselves on the world stage. We have invested in Greatview Aseptic Packaging, a manufacturer of bacteria-resistant drinks cartons. Greatview is building on its success in the domestic market and seeking to expand overseas, particularly in Europe. Chinese companies that become successful domestically will already be established, large businesses, and are therefore able to use the benefits that size brings to help ease the transition to becoming a global player,” he said.

Vaight added that his firm usually favours non-state owned companies such as Greatview, which tend to be run by management teams that are focused on profitable growth and where there is an alignment of interests with minority shareholders.

“We remain wary of many Chinese state-owned enterprises as we believe they are often run for the benefit of the state rather than minority investors. We do not hold any Chinese banks, for instance. In our view, they are not focused on capital efficiency and creating value for shareholders,” he added.