US investors maintain their steady push into Chinese equities as fund managers see value and opportunity
- Anticipated end to US-China trade war helps alleviate the negative tone
- American investor base is adding back to China region funds earlier than global peers
Between the parry and thrust of the US-China trade talks, uncertainty over economic growth rates, US interest rate policy and China’s credit reform programme, it appears US investors, more so than their global peers, have put increasing amounts of cash to work in China region equity funds.
And while they have been rewarded by share prices rallying to one-year peaks, several US fund managers who invest in Asia – and China more specifically – note that there is still a reluctance to put more money to work in Chinese-based companies.
“China as an asset class: at what point will people take it more seriously? Is it time to dedicate an allocation toward China?” said Andrew Mattock, San Francisco-based portfolio manager for Matthews Asia Funds.
“Are we at a tipping point where people allocate to China like they did to emerging markets 10 to 15 years ago? I think it is long overdue.”
Investors put a net US$1.87 billion into US-based China region funds in the first quarter of 2019, after a US$4.88 billion inflow of fresh capital for all of 2018, according to data from mutual fund tracker Lipper from Refinitiv.
“Total flows in 2016 and 2017, among all China-focused funds on a global scale, were not quite as strong as they were in the United States,” said Tom Roseen, head of research services at Lipper.
