July 31, 2018 / 5:00 AM / 9 months ago

POLL-China funds boost equity exposure on signs of policy easing

* For an accompanying table, click

SHANGHAI, July 31 (Reuters) - Chinese fund managers increased their suggested equity exposure for the next three months, as market sentiment improved amid signs of monetary and fiscal policy easing.

They raised their suggested equity allocations to 66.9 percent from a 33-month low of 65 percent a month earlier, according to a poll of eight China-based fund managers conducted this week.

They lowered their suggested bond allocations for the coming three months to 14.4 percent from 15.6 percent.

They reduced their recommended cash allocations to 18.8 percent from 19.4 percent in the previous month.

“Previously investors were worried about the impact from Beijing’s deleveraging campaign amid the trade frictions with the United States, but now we believe the actual impact would not be that bad as Beijing is fine-tuning its policies,” a South China-based fund manager said.

Expectations for China’s economic growth have improved due to the policy adjustment, said another South China-based fund manager.

There could be a good rally in the A-share market if major negative factors including the Sino-U.S. trade spat and the yuan’s depreciation alleviate, the fund manager said.

China will adopt a more vigorous fiscal policy to help tackle external uncertainties without resorting to strong policy stimulus, state radio said last week, citing the cabinet.

China plans to put more money into infrastructure projects and ease borrowing curbs on local governments to help soften the blow to the economy from the Sino-U.S. trade war, policy sources told Reuters.

Overall, the fund managers surveyed held mixed views on asset allocations for the next month, with five recommending boosting equity exposure and three suggesting a status quo.

According to the poll, average recommended allocations for financial stocks in the next three months rose sharply, those for auto, infrastructure and machinery shares edged up, while those for consumers dropped, as fund managers bought good stocks with low valuations and banking shares that are expected to benefit from policy easing.

For the month, average recommended allocations for financial stocks leaped from 11.9 percent to 18.1 percent, the highest in five months, while those for consumer shares were reduced to 34.4 percent from 40.8 percent a month earlier. ——————————————————————————————— To see other polls in this series, click on: - Reuters Britain-based asset allocation survey - Reuters U.S.-based asset allocation survey - Reuters Japan-based asset allocation survey - Reuters Continental Europe-based asset allocation survey (Reporting by David Lin, Luoyan Liu and John Ruwitch; Editing by Subhranshu Sahu)

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