China equity funds collapse in October

Data

Investors had no place to go but down in October. Which China funds fared the best and worst?

There were few places to hide during the fall in world markets in October and China equity investors were the most exposed to the negative sentiment.

The MSCI AC World fell 7.6%, the S&P 500 was down 7.2% and the MSCI China Index plunged 11.5%, according to FE data.

Among Hong Kong’s SFC-registered funds, most sectors recorded losses for the month. Technology was down (-11.6%), healthcare down (-8.75%), commodities down (-1.86), financials down (-8.4%), energy down (-11.6%).

In terms of geography, all the key equity sectors lost more than 7%.

China equities had the steepest decline among key sectors (-10.5%). Investors were no doubt waiting for a trigger to sell after US-imposed tariffs, slowing GDP growth and corporate debt concerns weighed on China equities throughout the year.

 

Source: FE. All fund NAVs converted to  US dollars.

For the China equity sector, the only fund that was positive (8.5%) was, unsurprisingly, an inverse ETF, the CSOP Hang Seng China Enterprises Index Daily (-1x) Inverse Product.

But there was a symmetry for the firm. CSOP also had the worst performing fund in October, the mirror of the inverse ETF, the leveraged ETF.

The CSOP Hang Seng China Enterprises Daily 2x Leveraged declined 17%.

 

Best and worst funds vs the sector and MSCI China

Source: FE. All fund NAVs converted to  US dollars.

Excluding ETFs and index funds, the top five China mutual fund performers were all negative:

Source: FE. All fund NAVs converted to  US dollars.

 

The bottom five funds, excluding passive products:

Source: FE. All fund NAVs converted to  US dollars.

 

Across all 53 FE categories for SFC-registered products, which actively-managed fund had the worst performance?

The Hong Kong-domiciled global mixed-asset fund, the Allianz Choice Capital Stable, which fell 20.7% during the month, FE data shows.

It’s surprising because multi-asset products aim to provide downside protection.

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