DJ ASIA FUND POLL: Fund Managers Like China, India, Indonesia (2009/07/30 15:57PM)
By Ellen Sheng
Of DOW JONES NEWSWIRES
HONG KONG (Dow Jones)--China, India and Indonesia stock markets remained fund manager favorites during the month of July, as increased optimism about the economic outlook whetted appetite for emerging markets.
International fund managers surveyed by Dow Jones became "overweight" on Asian emerging markets stocks this month, compared with a consensus "neutral" position in June. Managers active in the region are fairly concentrated on China, India, Indonesia, as well as Hong Kong, with other Asian country holdings at "neutral" or "underweight." Weightings reflect managers'' portfolio composition compared with benchmark indexes.
Investors have been warming up to China''s prospects as a growth driver in the Asia Pacific region. Domestic growth in the populous country is being driven by loose monetary policy and bank lending. China''s hefty stimulus packages are also supporting growth.
Encouraged by hiked earnings expectations and other signs, some market houses such as Threadneedle recently raised their expectations for gross domestic product growth this year to 8% from 7%.
"Though the export sector will have to start improving at some stage, China''s market share with certain export sectors has already increased and the government continues to have the means to initiate more stimulus measures should the U.S. recovery be delayed further," said Simon Godfrey, investment specialist for Pan Asia ex-Japan equities at Fortis Investments in Hong Kong.
Sectors poised to benefit from domestic growth such as consumer goods are particularly popular. Despite the market rally so far this year - The Shanghai Composite Index is up 10.38% thus far in July and up nearly 80% for the year - fund managers say valuations are still reasonable as they are below peak levels in 2007.
Hong Kong, as the longtime gateway to China, also remained on fund managers'' screens, though with some caveats.
Hong Kong is "a defensive market overall compared to the rest of Asia," said Fortis'' Godfrey. Large-cap stocks tend to be major banks, property and utilities companies and with a cyclical recovery taking place in the region''s largest economies, there is greater potential elsewhere and in other sectors, particularly consumer stocks, he said.
Like China, fund manager interest in Indian and Indonesian stocks is also a play on optimism about domestic growth.
India''s 2009 GDP growth, expected to be around 6% and 7%, is the second highest in the region and goods and services exports make up a smaller portion of GDP than more developed economies such as Taiwan or Hong Kong. The country''s relatively insulated economy has made investors optimistic about consumer consumption while government-sponsored infrastructure investments is spurring interest in infrastructure.
The Bombay Sensex 30 Index rose about 4.7% in July and is up 57.3% year to date. Given the rally, some fund managers are being more selective. Threadneedle, for instance, says it is underweight India in the near term while Fortis said it has taken some profits in financials and property stocks, which have full valuations after a strong second quarter.
Indonesian stocks, which became a favorite last month, continue to be popular. Fund managers noted that the country''s economy is more domestic driven, rather than export-driven, making it attractive in the current environment.
"Indonesia''s fundamentals continue to improve steadily," noted Invesco, which has been encouraged by the landslide victory of President Susilo Bambang Yudhoyono and his mandates to accelerate economic reforms. Moreover, Indonesia remains one of the cheapest markets in the region, the fund manager said.
Equities are back in fund managers'' good graces this month after being trumped by cash and bonds for several months. Managers were "overweight" equities - and particularly emerging markets stocks in July. Managers were only "slightly overweight" bonds and "underweight" cash. Emerging market equity funds and Asia ex-Japan equity funds saw mostly inflows during July, but with some occasional outflows. Global emerging markets equity funds posted big inflows in the third week of July, absorbing a net $1.08 billion, while Asia ex-Japan equity funds raked in US$973 million, according to Boston-based fund tracker EPFR Global.
Each month, Dow Jones Newswires surveys fund managers on portfolio weighting recommendations for the succeeding months, with most looking at a 12-month horizon. This latest survey was taken over the past week. The respondents for this month''s survey were Aberdeen Asset Management, Credit Agricole Asset Management, Fortis Investments, Invesco Ltd., J.P. Morgan Asset Management, ING Asset Management, Mirae Asset Global Investments, Schroder Investment Management Ltd., Standard Life Investments and Threadneedle.
For the survey, each participant was asked to assign recommendations to each asset class. The weightings from each fund manager were then averaged: 0 is neutral, up to +0.5 is slightly overweight, above +0.5 to +1 is overweight, above +1 is very overweight. Meanwhile, 0 to -0.5 is slightly underweight, below -0.5 to -1 is underweight, below -1 is very underweight. OVERALL GLOBAL WEIGHTINGS
July09 June May April March Feb
Cash -0.50 -0.25 0 +0.25 +0.25 0
Bonds +0.25 +0.50 +0.50 +0.50 +0.25 +0.75
Equities +0.50 0 0 0 +0.25 +0.25
Commodities +0.25 +0.25 +0.25 -0.50 0 --
GLOBAL BONDS July09 June May April March Feb
Asia ex-Japan +0.50 +0.50 +0.50 +0.50 +0.25 -0.25
Japan -0.25 -0.25 -0.25 -0.50 0 +0.50
North America -0.25 +0.25 0 -0.50 -0.25 0
Europe 0 +0.25 0 -0.25 +0.25 +0.25
Non-Asian +0.75 +0.50 +0.50 +0.25 +0.25 +0.25
emerging mkts
GLOBAL EQUITIES July09 June May April March Feb
Asia ex-Japan +0.50 0 +0.25 +0.50 +0.25 +0.25
Japan 0 -0.50 -0.25 -0.25 -0.50 0
North America -0.25 0 -0.25 0 +0.25 +0.25
Europe -0.25 +0.25 0 -0.25 0 0
Non-Asian +0.50 +0.25 +0.25 +0.25 0 -0.25
emerging mkts
ASIAN EQUITIES July09 June May April March Feb
Japan -0.25 -0.50 -0.25 -0.25 -0.50 -0.50
China +0.75 +0.50 +0.50 +0.50 +0.50 +1.25
Hong Kong +0.50 0 +0.25 +0.50 +0.25 +0.25
Taiwan -0.25 -0.50 -0.25 -0.25 -0.25 -0.50
South Korea 0 -0.25 0 -0.25 -0.75 -1.25
Singapore 0 0 -0.25 0 +0.25 +1.00
Indonesia +0.50 +0.50 +0.50 +0.25 +0.25 +0.25
Philippines 0 0 -0.25 0 0 +0.25
Thailand 0 0 0 0 +0.25 +0.25
Malaysia -0.75 -0.50 -0.50 -0.50 -0.50 -1.00
Australia -0.75 -0.25 -0.25 -0.25 -0.50 -1.00
New Zealand -0.50 -0.75 -0.75 -0.50 -0.50 -1.00
India +0.50 +0.75 +0.75 +0.25 +0.50 +1.00
-By Ellen Sheng, Dow Jones Newswires; 852-2832-2336; ellen.sheng@dowjones.com
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(END) Dow Jones Newswires
July 30, 2009 03:57 ET (07:57 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.
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Thursday, July 30, 2009
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Saturday, July 25, 2009
Tuesday, July 14, 2009
Monday, July 13, 2009
Cary Huang in Beijing 11 July 2009
Premier Wen Jiabao has ordered efforts be made to support the property and stock markets and carmakers, saying they were crucial to sustaining the economic recovery, at least in the short term. Mr. Wen also said the central bank should keep the credit tap fairly wide open to support big government spending. He made the statements in an internal meeting last month with the economy and finance ministers and executives of big state-owned companies, according to informed sources. This week, the premier warned that the current economic recovery was not built on solid foundations. He held two meetings to consult economic experts and industrial officials on economic policy, Xinhua reported. In the meetings on Tuesday and Thursday, Mr. Wen said that maintaining stable and relatively rapid economic growth was the government’s top priority, the official news agency said. Xinhua said Mr. Wen held the meetings to canvass opinions and seek suggestions regarding economic development. A reliable source quoted Mr. Wen as saying in last month’s meeting that “the government should spare no effort in maintaining the stability of stock and property markets and boosting spending on big items such as homes and cars.” The source said: “The top leadership believes that spending on those big items will be crucial to maintaining economic stability and growth, at least in the short term, in view of the continued global downturn.” The source, who was at the meeting with Mr. Wen, said the authorities would ensure plentiful bank lending and use fiscal measures to support the recovery of key industries because demand for mainland exports was likely to remain weak for some time to come. Mr. Wen acknowledged that such high spending might not be sustainable over the long term. He said that with the economy on the path to recovery, future policies would focus more on addressing medium-term structural problems and on boosting household income and domestic consumption to ensure sustainable growth. The mainland’s two stock exchanges have been the world’s best performers this year. The Shanghai Composite Index rallied 69 per cent in the first six months as improving credit, investment and manufacturing data suggested the government’s 4 trillion yuan (HK$4.54 trillion) stimulus package - announced in November to counter the impact of the global financial crisis and economic downturn - was reviving the mainland economy. Property sales and prices in the mainland have started to recover, driven by pent-up demand and supportive government policies. Property prices in 70 large and medium-sized cities rose 0.2 per cent in June from a year earlier, the first increase in six months, according to results of a survey by the National Development and Reform Commission and National Bureau of Statistics issued yesterday. The mainland surpassed the United States as the world’s biggest vehicle market in the first half of the year. June vehicle sales were up 36.5 per cent from a year earlier, at 1.14 million. That was the second highest on record; in April, 1.15 million were sold. Vehicle sales in the first half of the year reached 6.1 million, up 17.7 per cent from a year earlier, the China Association of Automobile Manufacturers said on Thursday. While there is growing consensus among analysts that the world’s third largest economy is on track to recover, some officials and academics have voiced concern an asset bubble is building up and that inflation may take off. On Tuesday, Zhang Jianhua , head of the People’s Bank of China’s research bureau, said some “fine-tuning” was necessary to prevent asset bubbles, bad-loan risks and a return to high inflation.
Premier Wen Jiabao has ordered efforts be made to support the property and stock markets and carmakers, saying they were crucial to sustaining the economic recovery, at least in the short term. Mr. Wen also said the central bank should keep the credit tap fairly wide open to support big government spending. He made the statements in an internal meeting last month with the economy and finance ministers and executives of big state-owned companies, according to informed sources. This week, the premier warned that the current economic recovery was not built on solid foundations. He held two meetings to consult economic experts and industrial officials on economic policy, Xinhua reported. In the meetings on Tuesday and Thursday, Mr. Wen said that maintaining stable and relatively rapid economic growth was the government’s top priority, the official news agency said. Xinhua said Mr. Wen held the meetings to canvass opinions and seek suggestions regarding economic development. A reliable source quoted Mr. Wen as saying in last month’s meeting that “the government should spare no effort in maintaining the stability of stock and property markets and boosting spending on big items such as homes and cars.” The source said: “The top leadership believes that spending on those big items will be crucial to maintaining economic stability and growth, at least in the short term, in view of the continued global downturn.” The source, who was at the meeting with Mr. Wen, said the authorities would ensure plentiful bank lending and use fiscal measures to support the recovery of key industries because demand for mainland exports was likely to remain weak for some time to come. Mr. Wen acknowledged that such high spending might not be sustainable over the long term. He said that with the economy on the path to recovery, future policies would focus more on addressing medium-term structural problems and on boosting household income and domestic consumption to ensure sustainable growth. The mainland’s two stock exchanges have been the world’s best performers this year. The Shanghai Composite Index rallied 69 per cent in the first six months as improving credit, investment and manufacturing data suggested the government’s 4 trillion yuan (HK$4.54 trillion) stimulus package - announced in November to counter the impact of the global financial crisis and economic downturn - was reviving the mainland economy. Property sales and prices in the mainland have started to recover, driven by pent-up demand and supportive government policies. Property prices in 70 large and medium-sized cities rose 0.2 per cent in June from a year earlier, the first increase in six months, according to results of a survey by the National Development and Reform Commission and National Bureau of Statistics issued yesterday. The mainland surpassed the United States as the world’s biggest vehicle market in the first half of the year. June vehicle sales were up 36.5 per cent from a year earlier, at 1.14 million. That was the second highest on record; in April, 1.15 million were sold. Vehicle sales in the first half of the year reached 6.1 million, up 17.7 per cent from a year earlier, the China Association of Automobile Manufacturers said on Thursday. While there is growing consensus among analysts that the world’s third largest economy is on track to recover, some officials and academics have voiced concern an asset bubble is building up and that inflation may take off. On Tuesday, Zhang Jianhua , head of the People’s Bank of China’s research bureau, said some “fine-tuning” was necessary to prevent asset bubbles, bad-loan risks and a return to high inflation.
Thursday, July 9, 2009
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