Respondents to the Fund Selector Asia Asset Class Research, a quarterly survey of long-term (12 months) sentiment of fund selectors in Hong Kong, Singapore, Thailand and Malaysia, have shown a markedly higher interest in Chinese equities in September, when the most recent data was collected, than three months earlier.
Chinese Equities
Data: FSA
The question FSA posed was: “In the next 12 months, will you increase your asset allocation to Chinese equities, decrease it, maintain it at the current level, or you don’t invest in it?”
In September, 51% of respondents said they would add to their allocation, compared to only 35% in June. The percentages of those who said they would reduce their allocation and who do not invest in China remained approximately the same.
The change in the sentiment is supported by the International Monetary Fund’s revision of its growth forecast for Chinese economy. In July, it raised the forecast to 6.7% in 2017, up from 6.6% earlier, and to 6.4% in 2018, up from 6.2%. The IMF further raised its forecasts in October, to 6.8% in 2017 and 6.5% in 2018.
Chinese equities stand out from the broader emerging market equity sector, as the long-term attitudes to global emerging market equities did not change much from June to September.
Global Emerging Market Equities
Data: FSA
If asset allocators in the four financial centres carry out their intentions to stock up on Chinese equities, it will represent a turnaround for Chinese equity funds, which have been experiencing net outflows, according to data from Morningstar.
Greater China equity funds domiciled in Hong Kong, with the largest aggregate AUM in the region, had net outflows of $2.65bn in the third quarter of 2017, and $5.48bn since the beginning of the year.
Net flows into Hong Kong-domiciled Greater China equity funds
