Chinese funds suggest bond exposure, trim equity and cash

05 Aug, 2013

Chinese fund managers recommended that clients increase exposure to bonds in July, while trimming stocks and cash allocations with economic growth still sluggish as the cash market stayed relatively tight, a Reuters poll showed on Wednesday. The average recommended bonds weightage in a portfolio increased from 5.8 percent in June to 8.1 percent in July, according to a monthly poll of 10 China-based fund managers conducted this week.
Money managers cut suggested allocations for equities to 82.3 percent in July from 83.5 percent a month ago and cash holdings to 9.6 percent in July from 10.8 percent in June.
The Shanghai Composite Index and the CSI300 of the leading Shanghai and Shenzhen A-share listings are each down more than 10 percent on the year as Beijing has abstained from strong policy stimulus despite sluggish growth.
Fund managers said liquidity conditions in the mainland have stayed tight and are unlikely to improve in the near future as Beijing focuses on longer term structural adjustments to the economy, with cyclical sectors seen especially under pressure.
They also expect markets to stay choppy ahead of the third plenum of the 18th Central Committee of the Communist Party of China, due to be held in October where leaders set their economic agenda for the next decade.
Fund managers surveyed on average increased stock allocations to the consumer, transportation, property and machinery sectors, while trimming exposure to the financial and electronic and technology sectors.

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