FSA’s Fund Selector Asset Class Research is a quarterly survey of fund buyers in the three Asian financial centres. FSA asks participants to state their intentions around asset allocation in 26 asset classes and fund categories in the coming 12 months.
While nearly half of the respondents in the March 2017 survey said they were planning to increase their asset allocation to Chinese equities, in June 2017 only 35% said so. Moreover, 12% of the fund selectors surveyed said in June that they would likely decrease their allocation, while three months earlier none said they were planning to do so.
Intentions for asset allocation to Chinese equities in the next 12 months
This diminishing enthusiasm for Chinese stocks may reflect investors’ concerns about the country’s economy, commented Edmund Yun, head of investment solutions at CIC Investor Services in Hong Kong. “People are starting to digest whether the economy may slow down next year,” he told FSA.
The general sentiment is still largely positive, he noted. “With MSCI’s inclusion of A-shares in their emerging market indices, more investors, particularly on the institutional side, will try to find some value stocks in the A-share market,” he added.
Fund selectors continue to look favourably to Europe and Asia-Pacific ex-Japan. 54% of respondents said they were going to increase their allocation to these equity sectors.
While the negative sentiment towards US equities persisted since the early 2017, fewer respondents − 23% in June vs 38% in March − said they would decrease their allocation. The number of those who said they would hold their allocation at the current lever ballooned from 29% in March to 60% in June.
Intentions for asset allocation to US equities in the next 12 months
Yun said he was neutral on US equities at best, since their valuations were high. Also, opportunities are better in Europe, he added. “Earnings per share growth in Europe should be positive in the next 12 months, compared to the US,” he explained.