SHANGHAI (Reuters) - Chinese fund managers have kept their suggested equity exposure for the next three months unchanged from the previous month, although they turned more upbeat as headwinds that had pressured domestic markets eased, a monthly Reuters poll showed.
The fund managers’ suggested equity allocations remained unchanged from 76.3 percent a month earlier, which was the lowest in 7 months, according to a poll of eight China-based fund managers conducted this week.
The fund managers have, meanwhile, raised their suggested bond allocations for the coming three months to 10.6 percent from 8.8 percent a month ago.
They have cut recommended cash allocations to 13.1 percent, from 15 percent in the previous month.
“Currently the market sentiment has picked up somewhat, as unfavourable factors such as the central bank’s balance sheet shrinking and bad (economic) data are gradually being priced in,” a Shanghai-based fund manager said.
Investors could seek opportunities in the bond market, where risks have already unwound to some degree, in the second half of the year if inflation is not high, another Shanghai-based fund manager noted.
Those fund mangers surveyed held optimistic views on asset allocations for the next month, with four suggesting boosting equity exposure, two suggesting cutting, while another two recommended the same equity exposure.
Average recommended allocations to electronics & technology stocks remained high, allocations to financials fell, while those to consumer shares rose, indicating some fund managers could have started to adjust their positions after a robust rally in financial plays.
Three fund managers surveyed said chances for investment in growth stocks are increasing as they are trading near their bottom levels, while stocks with good fundamentals are still highly preferred for the moment.
“We tend to see a possible change in the style of stock picking, with opportunities in the growth stocks gradually emerging,” another fund manager pointed out.
However, according to some fund managers, market participants will not immediately embrace investment themes with relatively higher risks, and are expected to seek opportunities in industry-leading companies which will report solid mid-year results, including cyclical and growth stocks little noticed previously.
“It’s not that worth chasing some blue-chips at record highs,” a South China-based fund manager said.
Average allocations to electronics & technology stocks were 25 percent, still the highest level since the launch of the poll, allocations to financial services stocks were cut to 15 percent from the 6-month high of 16.9 percent, while those to consumer-related companies were raised to 26.9 percent from 24.4 percent previously.
Reporting by David Lin, Luoyan Liu and David Stanway; Editing by Shri Navaratnam