China fund managers continued to cut suggested equity holdings for the next three months, as they seek to reduce exposure at a time when the market sees limited upside opportunity in a rangebound market, according to Reuters' latest monthly poll. Eight fund managers polled by Reuters cut their recommended equity allocations for the next three months to 71.9 percent from 76.3 percent a month ago.
The fund managers raised their recommended bond allocations to 8.8 percent from 5.6 percent last month, and also suggested increasing cash holdings to 19.4 percent from 18.1 percent a month ago.
"The market will probably continue to be rangebound. A further rise also means greater downside risk, so we'll reduce our exposure overall as the market advances," a fund manager in southern China said, adding that individual stocks or "concept stocks" in the short run might see better chances for upside than indexes.
"The Fed's recent comments dampened the market's risk appetite, though we don't see much possibility of an imminent rate hike by the Fed, "a Shanghai-based fund manager said.
Federal Reserve Chair Janet Yellen said on Friday that the case for a rate hike had strengthened in recent months in light of the continued solid performance of the labour market and the Fed's outlook for economic activity and inflation, though the central bank still thinks future rate hikes should be "gradual".
Suggested exposure to auto, consumer and electronic stocks was raised on average, while exposure to such lower-valuation sectors as financial service and property stocks was cut on average, a sign that those sectors lost steam after a short-lived rally while "concept stocks" gained traction again, according to the poll.
"I feel new energy auto stocks are going to rebound," a Shanghai-based fund manager said.
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