The firm’s China-focused portfolio has been taking profits from offshore-listed equities and increasing exposure to both A-shares and mainland bonds in the past few months, said Ricky Tang, Schroders multi-asset product manager.
RMB depreciation is posing risk for both equity and fixed income investment, sources said.
Though US presidential elections are approaching fast and Brexit uncertainty is still riding high, China is the biggest macroeconomic risk right now, according to fund selectors attending the recent Expert Investor forum in Barcelona, organised by FSA’s sister publication Expert Investor.
A year after China’s one-off currency adjustment, there is still room for further depreciation of the renminbi against the US dollar, said Jade Fu, investment manager at Heartwood Investment Management.
The Chinese renminbi may depreciate milder in the coming 12 months, but it will still be enough to impact the return generated from fixed income products, strategists said.
The Chinese currency is under depreciation pressure, as the country needs to lower its foreign debt levels, according to Mo Ji, the firm’s chief economist for Asia ex-Japan at Amundi Asset Management.
China’s currency depreciation trend playing out in 2016 looks set to continue, according to Jade Fu, investment manager at Heartwood Investment Management.
The MSCI decision in June will be an important signal to foreign investors, said investment director and Asia CEO Paul Danes.
The sharp rise in Chinese onshore bond defaults should not be exaggerated as the deleveraging of weak corporates is inevitable, said Bryan Collins, portfolio manager at Fidelity International.
Efforts to stabilise the RMB are likely to be short-lived, and the Chinese currency will come under renewed pressure, said Alex Wolf, emerging markets economist at Standard Life Investments said.