US fund manager adds Chinese stocks with eyes on meaningful stimulus and inflows
While many global firms are underweight on China, a shift to neutral position could spur US$6 billion of inflows into Chinese assets, executive estimates
Principal Asset Management, a US-based money manager, said China is taking “meaningful” steps to revive its economy, leading to an upturn in sentiment among investors. The government should encourage “a healthy, slow bull market” instead of wild swings in prices, others said.
“We’ve been adding to China, both indirectly through Hong Kong and directly through China,” Steve Larson, a portfolio manager for global equities, said at a conference in Hong Kong on Thursday. “I have shifted from sceptical to being a lot more optimistic regarding where we go from here.”
While it is underweight in allocation to China, the fund “is going in the right direction”, said Larson, whose firm manages about US$699 billion globally as part of Des Moines, Iowa-based Principal Financial Group.
The optimism reflects new-found confidence among global funds about China’s near-term prospects, following Beijing’s policy stimulus last month to stop the rot in the property and stock markets. The package unveiled on September 24 has sparked a world-beating rally in stock prices, along with bouts of wild swings.
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Wild swings in Hong Kong and mainland China stock markets
Principal Asset Management is not alone. Money managers in Asia-Pacific have become more bullish too amid mounting expectations for stronger policy easing measures, according to a Bank of America survey this month. They have put more money in Chinese assets and trimmed allocations in India.
“As investors, we are naturally suspicious of Chinese government policies because in the past, execution has been a big issue,” said Alan Wang, managing director and chief investment officer for Greater China equities. “But this round, I believe a few things are very meaningful” in terms of the fresh monetary and fiscal incentives, he added.
