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POLL-China funds cut suggested equity, bond exposure; boost cash holdings
September 30, 2016 / 5:05 AM / a year ago

POLL-China funds cut suggested equity, bond exposure; boost cash holdings

(For accompanying table, click on )

SHANGHAI, Sept 30 (Reuters) - China fund managers further cut suggested equity holdings for the next three months to the lowest level in nearly one year, as the domestic stock markets remain rangebound in thin volume amid increasing uncertainties overseas.

Eight fund managers polled by Reuters cut their recommended equity allocations for the next three months to 68.1 percent from 71.9 percent a month ago.

The fund managers cut their recommended bond allocations to 7.5 percent from 8.8 percent last month, and also suggested increasing cash holdings to 24.4 percent from 19.4 percent a month ago.

“While a (U.S.) rate hike has yet to materialise, investors’ risk appetite might be dampened as Fed is seen most likely to take that action in December,” a Shanghai-based fund manager said.

China’s A-share market is expected to be more volatile in the fourth quarter, as investors are concerned about the instability in overseas markets.

These include a probable rate hike by the U.S. Federal Reserve this year, a possible “black swan event” incurred by Italy’s referendum, uncertainties in the US presidential election as well as a likely turning point in global liquidity, another fund manager said.

The U.S. Fed kept interest rates unchanged in its September meeting. Italy will on Dec. 4 hold a referendum on constitutional reforms, whose result could determine the destiny of its current government.

Suggested exposure to stocks of financial services companies and electronics firms was raised on average as they became safe-haven assets due to their lower valuations, while exposure to auto stocks was cut significantly to normal levels as speculation in auto-related subjects faded.

Suggested exposure to financial services stocks was boosted on average to 15.6 percent from 11.9 percent last month, and suggested exposure to auto stocks was cut to 4.4 percent from 7.5 percent.

China’s stock market has lost 15 percent so far this year amid worries about the health of the domestic economy and a depreciating yuan.

Many investors have still not returned after a crash last summer that wiped out trillions of dollars in market value, prompting an unprecedented government rescue. ---------------------------------------------------------------

To see other polls in this series, click on:

GB/ASSET - Reuters Britain-based asset allocation survey

US/ASSET - Reuters U.S.-based asset allocation survey

JP/ASSET - Reuters Japan-based asset allocation survey

EUR/ASSET - Reuters Continental Europe-based asset

allocation survey (Reporting by Luoyan Liu; Editing by Biju Dwarakanath)

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