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POLL-China funds cut equity exposure to 1-year low, boost cash
September 29, 2017 / 5:03 AM / 24 days ago

POLL-China funds cut equity exposure to 1-year low, boost cash

* For accompanying table, click on

SHANGHAI, Sept 29 (Reuters) - Chinese fund managers cut their suggested equity exposure for the next three months to the lowest level in a year, citing worries over economic growth following a flurry of worse-than-expected data, a monthly Reuters poll showed.

The fund managers slashed their suggested equity allocations to 73.8 percent, from 76.9 percent a month earlier, according to a poll of eight China-based fund managers conducted this week.

The fund managers have kept their suggested bond allocations for the coming three months unchanged at 10 percent.

They have boosted recommended cash allocations to 16.3 percent for the next three months, from 13.1 percent the previous month.

“The seasonal fall in August economic data could put major stock indexes under pressure for the short term,” said a South China-based fund manager.

China posted a rare flurry of disappointing data in mid September -- including its slowest growth in investment in nearly 18 years -- suggesting the world’s second-largest economy is finally starting to lose some momentum as borrowing costs rise.

But some fund managers remain cautiously optimistic about the overall economic health, saying the August data was affected in part by seasonal factors and Beijing’s environmental protection efforts.

The stock market could be attractive given its relative strength, as investors would pull money out of properties into stocks amid Beijing’s stepped-up curbs on the housing market, a Shanghai-based fund manager pointed out.

A number of provincial capitals across China have rolled out new curbs to further slow home property sales, and bear down on lingering speculators that could destabilise markets ahead of a key Communist Party congress next month.

The fund managers surveyed held mixed views on asset allocations for the next month, with two suggesting the same level of equity exposure, two signalling an increase, while four recommended a cut.

According to the poll, average recommended allocations to metal shares dropped, while those to financials, developers and automakers rose, as investors shunned resources shares and turned to firms with lower valuations after disappointing economic data.

Average recommended allocations to metals shares were cut to 5.6 percent from a near seven-year peak of 8.8 percent last month, while those to financial stocks were raised to 17.4 percent from 15.8 percent, according to the poll.

Another Shanghai-based fund managers preferred banking and consumer stocks with lower valuations, steady performance and high dividend payments, citing tight liquidity conditions and concerns that the economy could be losing momentum. -------------------------------------------------------------- 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 Vyas Mohan)

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