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POLL-China funds reduce equity exposure, boost bonds and cash for next 3 months
March 31, 2017 / 5:02 AM / 8 months ago

POLL-China funds reduce equity exposure, boost bonds and cash for next 3 months

* For accompanying table, click on

SHANGHAI, March 31 (Reuters) - Chinese fund managers recommend reducing equity exposure for the next three months as worries including tighter liquidity remain even as fresh data indicates the economy is steadying and improving, a monthly Reuters poll showed.

The fund managers cut their suggested equity allocations to 79.4 percent, according to a poll of eight China-based fund managers this week, from 81.9 percent a month earlier.

The managers have raised their suggested bond allocations for the coming three months to 7.5 percent from 6.3 percent a month earlier.

They have also hiked recommended cash allocations to 13.1 percent, from 11.9 percent in the previous month.

“From the point of the macro-economy, the market in general has been running steadily and the chances for unexpected movements could be small, ” said a Shanghai-based fund manager who adds there could be opportunities to buy shares of some sectors.

But another fund manager notes two big concerns: more rate hikes by the U.S. Federal Reserve in 2017 and China’s tightening monetary policy.

Chances are small that China will raise interest rates this year, but the country’s central bank could cut liquidity through its open market operations, the manager said.

Zhou Xiaochuan, governor of the People’s Bank of China (PBOC), said on Sunday that he expects to see more countries start to emphasize fiscal policy and structural reform as the period of global loose monetary policy ends.

According to the poll, average allocations to consumer stocks have been increased to a record high in a year, allocations to electronics also rose sharply, while those to financials, metals and machineries have been lowered. That indicates managers are moving out of cyclical stocks and into growth ones.

Compared with last month, the average allocation to consumer stocks was raised to 32.5 percent - the highest since April 2016 - from 29.4 percent. Allocations to machinery has been trimmed to 5.6 percent from 8.1 percent, while those to metals have been cut to 3.1 percent from 6.3 percent.

“Investors could see more chances in growth stocks, while plays related to commodities might take a breather,” a Shanghai-based fund manager said. -------------------------------------------------------------- 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 David Lin, Luoyan Liu and John Ruwitch; Editing by Richard Borsuk)

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