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CIFM focuses on A-share earnings

Mainland companies with stable earnings and low valuations are preferred amid uncertainties around the globe, said Jenny Szeto, Hong Kong-based senior fund manager at CIFM Asset Management.
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“The biggest risk in the coming months is an interest rate hike by the Federal Reserve, which will further tighten the liquidity in the stock markets and affect A-shares as well,” she said in a briefing last Friday.

CIFM is the mainland joint venture between JP Morgan Asset Management and state-owned Shanghai International Trust. Its Hong Kong unit is selling two funds at the moment, according to its website. Szeto helps manage the CIFM (HK) RMB Diversified Income Fund.

She is neutral on commodity-related companies after a rally in stock prices driven by improving oil prices and overcapacity issues. Commodity and related stocks could face sell-off pressure if there is no conspicuous pickup in demand, she noted.

Instead, the firm favors companies in the electric vehicle industry, as well as some transport and construction companies.

Sales of electric vehicles in the mainland are expected to surge by 36% annually to nearly 2 million in 2020, compared to roughly 379,000 in 2015, she said.

The transport and construction industries, such as railway builders, are expected to benefit from increasing orders and cheap funding through the public-private partnership models, she added.

The relatively cheap valuations, currently at about 14 times the price-to-earnings ratio on average, also makes transport and construction attractive.

Part of the Mark Allen Group.