Magdalene Miller, Fondsmanagerin des "Standard Life IG SICAV China Equities A" (08.04.2010): "Our investment philosophy is ´Focus on Change´. We look for changes in Industry Structure, Company Behaviour, New Developments that could affect a corporate´s future profitability and cashflow to shareholders and how are these factors are reflected in the share prices. The fundamental factors that we are looking at now are the same ones we always look at."
Martha Wang, Fondsmanagerin des "Fidelity Funds - China Focus A" (07.04.2010): "I adopt a bottom-up approach to stock selection. I emphasise valuation criteria, such as price-to-book ratios, as part of the stock selection process. I also look for companies which are industry leaders, with high entry barriers and low costs of production. I also favour companies where senior management has a flexible mindset and strategy; I regard these as essential requirements for capturing market share and driving earnings growth in China’s rapidly changing environment. While there are no systematic biases in the management of the portfolio, this focus results in a growth at reasonable price style."
Yi Tang, Fondsmanager des "Saint-Honore Chine A" (14.04.2010): "• Industries with long term growth potential
•Leading or differentiating positions of the company in its segment
• Management quality and corporate governance
• Financial strength and undemanding valuation"
Howard Wang, Fondsmanager des "JF China A Dist USD (06.04.2010): "Inefficient, immature Chinese markets coupled with local issues and domestic market sentiment reward active investment management. We believe China is a market where top-down analysis is a priority, whether on the macro level or industry level. Using a top-down focused process to find industries and stocks with high and/or improving return on equity and growth at a reasonable price. Our solid local knowledge and strong local contacts via our large and well-resourced team in Hong Kong and Shanghai give us an edge when picking stocks within China."
Christina Chung, Fondsmanager des "Allianz RCM China - A - USD" & "Allianz RCM China Fund - A - USD" (08.04.2010): "There are 4 major themes that are driving China´s current economic environment. These include: 1. From excessive pump-priming to normalization, 2. From crisis management to sustainable long-term growth, 3. From costal to inland regions, 4. From macro to micro management. Having this long term structural trend in mind, however, we still maintain our investment approach when we assess individual stock investment opportunities; these are 1. earnings growth 2. management quality and 3. valuation."
Samantha Ho, Fondsmanagerin des "Invesco PRC Equity USD A" (09.04.2010): "Growth at a reasonable price / value + catalyst is something we always look at, but policy has become an increasingly important factor when assessing China stocks. This includes fiscal policies – i.e. where government spending is concentrated; monetary policies – interest rate and exchange rate policies – and, lastly, industry-specific policies – e.g., tax on property sales, etc. This was especially true in 2009, when we saw an extreme divergence in performance across sectors. Domestic consumption plays, such as auto and home appliance related stocks, surged on the back of government stimulus for spending in rural areas.
Douglas Turnbull, Fondsmanager des "Neptune China A Acc" (08.04.2010): "Our investment strategy for the Neptune China fund is very much in line with the Neptune research process, whereby we look at stock selection with a top-down view. As a company we identify the sectors and areas that are most interesting and then identify the companies that are best exposed to those areas before drilling down into the specifics of one or two corporations. In selecting these corporations we look for quality of management, financial strength, sufficient liquidity and valuation upside. As China specialists, we take the Neptune top down knowledge approach and view it through a lens of China-specific knowledge to make sure the ideas generated are relevant to our specific fund."
Victoria Mio, Fondsmanagerin des "Robeco Chinese Equities D EUR" (08.04.2010): "We stick to our investment discipline of carefully evaluating macro economic implications to formulate a thematic overlay in our portfolio which consequently are populated with a bottom-up stock selection. This two-step process remains guiding regardless of the current investment environment. Obviously, there are a couple of topics which have been driving the market sentiment currently, including macro economic growth model, exit strategy for fiscal stimulus, monetary tightening, external demand, RMB appreciation, inflation, and asset bubbles.
The most important changes that are happening and will have long term implications is the progress towards a more balanced and sustainable growth, with strong emphasis on domestic consumption. The political leaders are emphasizing that they do not recklessly pursue faster growth but on put greater efforts into promoting transformation of the pattern of economic development and adjustment of the economic structure. The authorities also aim to improve the quality and efficiency of economic development and its sustainability. In 2010, fiscal policy will remain expansionary but the focus will shift from investment to structural adjustment. Likewise reforms were implemented faster as the financial crisis brough about urgency: realizing that the US will no longer be the consumer of last resort; China has started cultivating its own domestic market. The cornerstone of the reform is to mobilize the spending power of the Chinese population. That is the key to the long-term sustainability of Chinese economic growth. Also noteworthy are the pension reform and health care reform.
In terms of exit strategies on both fiscal and monetary stimulus, China’s Premier Wen, in his state of the union address, delivered a clear message that China will continue with incremental tightening, but will not deliberately take more dramatic measures to slow growth. And with the economic growth on track a great deal of market attention has been paid to the most sensible exit strategy. We are convinced that the timing and magnitude of further tightening measures will be data dependent and that smaller adjustments will be preferred over radical changes.
With global economy stabilizing and export growth turning positive, RMB appreciation is on the card. We believe an adjustment will likely take place within the next 1-2 months. The initial move will probably feature a widening of the daily USD/RMB daily trading band.
Finally, we are aware that international investors remain concerned about possibly developing asset bubbles. With inflation expectation on the rise, there have been some overheating in property assets in tier-1/-2 cities. However, the overall national market remain healthy, normal signs like a growing speculative activity, a sharp increase in underlying indices, and overly complacent investors are few and far in between. Nevertheless, with potential hot money flows and excess optimism causing RMB appreciation and strong economic growth, we cannot rule out that they will form. We find it reassuring that the Chinese government has learnt some lessons from the boom/bust cycles in 2007. They are taking pre-emptive measures by gradually withdrawing liquidity and sending signals to the market to rein in speculation, so that the stock and property market will not run too much ahead of fundamentals."
Frage 2:
e-fundresearch: "Welche Über- und Untergewichtungen haben Sie derzeit in China Aktienfonds umgesetzt?"
Magdalene Miller, Fondsmanagerin des "Standard Life IG SICAV China Equities A" (08.04.2010): "Overweight in Healthcare and Consumer Discretionary - growth is still underestimated by the current valuation and there are companies that are emerging to be global champions (not just feasting on domestic growth). Underweight in Financials and Telecom services - Mammoth companies within these sectors are unlikely to surprise as they are well researched and well understood by the market. Their corporate behaviour is very much subject to government control."
Martha Wang, Fondsmanagerin des "Fidelity Funds - China Focus A" (07.04.2010): "Urbanisation and the subsequent consumption factors are important stories driving holdings in my portfolio. Therefore, I am currently overweight consumer, IT, healthcare and insurance names in my portfolio. I am currently underweight telecoms and energy sectors since I have found better opportunities in other sectors.
Notably, within the consumer sector, my biggest overweight positions are in Belle International, Li Ning and Gome Electrical. For example, Gome Electrical Appliances is attractive given continuing take up of appliances helped by the domestic demand-boosting policies. I also like Ctrip.com, the leading travel agent in China, which benefits from the growth of the middle class and the subsequent travel market. In the recent months, I have added luxury department store operator Maoye International to the fund on the back of increasing demand for high-end retail products in China.
Within the IT sector, I like Tencent, a networking and internet messaging firm, which is benefiting from strong growth in its user base and improved monetization of its services. I am also overweight ZTE Corporation, a telecommunications equipment and infrastructure manufacturer. ZTE should benefit from government’s policy in building domestic telecom supply chain and infrastructural growth in China.
Within the healthcare segment, I am overweight Wuxi Pharmatech. It is a clinical research organization in China with the longest history, benefiting from the global R&D outsourcing trend and the increasing outsourcing to China.
In the Insurance segment, I like Ping An Insurance. It is a part of the middle class growth story as consumers increasingly look to secure their future. Also in the short term, interest rate hike and equity market rally in China will lead to higher investment returns for the insurance companies."
imgr(14)#Yi Tang, Fondsmanager des "Saint-Honore Chine A" (14.04.2010): "• Overweight: Industrials, health care, materials, telecommunications, consumer discretionary
• Underweight: Financials, energy, consumer staples"
Howard Wang, Fondsmanager des "JF China A Dist USD (06.04.2010): "Whilst short term volatility may occur, we believe in the long term capital growth of China and this underpins our investment philosophy. Sectors we currently favour include financial sectors, technology and commodities. We are underweight low growth sectors such as utilities at present. However, our overlying view is mainly focusing on stock picking attractively valued companies that capture the positive domestic market growth in China."
Christina Chung, Fondsmanager des "Allianz RCM China - A - USD" & "Allianz RCM China Fund - A - USD" (08.04.2010): "First of all, I would like to emphasize that we do not make any sector call and it is the by-product of our stock-by-stock approach. Therefore underweight/overweight in certain sector does not say much about strategies as the composition of the portfolio in certain sector can be very different from that of benchmark even when the sector weights don´t show much deviation. Despite this, we try to explain the areas we focus using some sector groupings as it is easier to explain than in each individual stock level.
- You will see structural underweight in big-cap sectors (Financials, Energy and Telco) most of the times we try to diversify away from these sectors in order to give rooms for other niche area.
- Within Financials, we like insurance over banks although we see some values in banking names as many negatives are already priced-in and valuation is very attractive. Long-term positive on properties although we are short-term cautious due to policy risk.
- We like IT (IT services, Telcomm. equipment which can benefit global market share gain), Industrials (gas pipeline, environment-related area, machinery and equipment)
- We like Consumer names and want to add some more position upon share price weakness but current valuation has run ahead."
Samantha Ho, Fondsmanagerin des "Invesco PRC Equity USD A" (09.04.2010): "We are currently overweight in consumer discretionary, consumer staples and materials. In general, we are more positive towards domestic-related sectors and industries that are poised to benefit from government stimulus policies. On the other hand, we are underweight in financials and telecommunications. In view of the capital raising overhang that will persist for some time, we feel that it will be difficult for banks to outperform in the near term, despite attractive current valuation levels. We have been underweight in telecoms for some time as we believe that the industry will be dragged down by its capex requirements for 3G and intensified competition."
Douglas Turnbull, Fondsmanager des "Neptune China A Acc" (08.04.2010): "As indicated by the turnover figures, the fund takes long-term bets, borne out of our deep convictions in the long term themes we have identified as playing out in the Chinese economy. A corollary of such an approach is that we do not usually seek to swing the fund around according to short term shifts in sentiment, nor to chase a momentum driven market rally for instance. Currently, Consumer Discretionary stocks account for around 5% of the MSCI benchmark whereas the Fund holds over 20% in the sector.
Conversely, Compared to almost 37% in the index, the fund has around 18% exposure to financials (increased from around 13% in October 2009). This does remain a substantial underweight. With financials, it is important to remember that one is dealing really with 3 separate subsectors- insurance, banks and property- the weightings of which combine to make a larger sector picture.
Banks, for example, comprise over 20% of the MSCI China Index, and in October 2009 we had only a 3.5% weighting here. This enormous underweight has since been reigned in slightly and the addition of further bank stocks, taking our weighting up to near 10%, explains the incremental increase in the fund’s broader financials weighting. There are several factors which hold us back from having more exposure here, best summed up as continued overhangs. There is the concern about capital raising. There is also concern about bad debts, and specifically the risks posed by lending to Local Government Financing Vehicles. A third example of a current overhang is the timing of interest rate rises, the general uncertainty of the timing and severity of monetary policy tightening, and indeed the degree to which that will impact either on the banks´ operations or, more likely, and ultimately more importantly, on investor sentiment towards them."
Victoria Mio, Fondsmanagerin des "Robeco Chinese Equities D EUR" (08.04.2010): "As evident in the policy statements by the State Council and key messages from the recent Chinese National People´s Congress (NPC), the Chinese government strives to boost consumption further by income transfers and fiscal subsidies. We are very convinced to keep domestic consumption as our major investment theme in 2010! Our active positions have been broadly the same as last year, and we have not made significant changes in anticipation of the correction. As we already indicated in our January 2010 market outlook, after a strong 2009 rally, global markets were bound to go through a correction. We believe it represented merely a temporary setback in an upward trajectory, rather than the beginning of a bear market. With our focus on domestic demand we favor themes such as middle class consumer products, internet, health care reform, agriculture and domestic industrials. We still underweight global sectors and interest rate sensitive sectors such as export, commodities, banks and properties. We have reduced infrastructure exposure due to the deceleration in growth in fixed asset investments."
Frage 3:
e-fundresearch: "Wie beurteilen Sie die Zins-, Geld- und Währungspolitik von China?"
Magdalene Miller, Fondsmanagerin des "Standard Life IG SICAV China Equities A" (08.04.2010): "Still loose. Our strategy team just came back from China last week and their observation is that the Government will continue to move the monetary policy towards neutral by participating in the bond market (pushing yields up), raising reserve requirement and maybe interest rates. Their last resort is currency. So loan growth should slow down quite markedly in the 2H of this year (from 32% in 2009)."
Yi Tang, Fondsmanager des "Saint-Honore Chine A" (14.04.2010): "Overall monetary policy will remain accommodative. We have already seen two Required Reserve Ratio (RRR) hikes. It´s likely we will see further RRR increases as well as interest rate hikes. We also expect RMB to start appreciate against USD this year. However, any such moves would be gradual."
Howard Wang, Fondsmanager des "JF China A Dist USD (06.04.2010): "Concerns about imminent aggressive policy tightening derailing the current trend are unwarranted. The Chinese government will err on the side of a late exit rather than an early exit from its stimulus programs, given both the political and economic considerations.
We believe that the Chinese government has been very proactive to prevent a bubble from forming, which is why they are gradually exiting from fiscal and monetary stimulus now and proactively trying to slow bubbles from forming in the property market and trying to prevent over-investment. Measures include engineering a slowdown in loan growth (from 30% in 2009 to 20% estimated in 2010), increasing Required reserve ratio, slowing fixed asset investment, imposing measures to curb speculation in the property market, tightening standards for loans for mortgage or for land acquisition.
This follows 600bn USD of fiscal stimulus in 2009, cuts in interest rates and 30% credit growth in 2009, which were necessary measures to stimulate the economy after the onset of the global financial crisis, and are similar measures to that put in place by other countries to stimulate the economy.
The renminbi could potentially be revalued in a one-off move, and then be permitted to trade in a wider band. However, our China team believes that the authorities will take a gradualist approach to revaluation, perhaps starting mid-year, avoiding a sizable initial jump (say, of over 3%) in order to protect unhedged exporters. The ‘crawling peg’ used between 2005 and 2008 is the most likely method, which during that period resulted in an appreciation against the dollar of approximately 3.5% pa."
Christina Chung, Fondsmanager des "Allianz RCM China - A - USD" & "Allianz RCM China Fund - A - USD" (08.04.2010): "Interest rate hike is also possible in order to keep the real interest rate positive. The current real interest rate is already negative, as inflation has peaked recently. However it will be used at a lesser degree compared to RRR hike as a tool to absorb excess liquidity as the impact of interest rate hike is more wide-spread to the overall economy.
As per RMB, gradual appreciation in RMB is expected. We believe Chinese government is ready to appreciate RMB in a gradual manner as the export is recovering and the overall economic situation has improved a lot from the peak of the financial crisis. We expect around 5% appreciation against USD over the course of this year. The external pressure on RMB appreciation seems counter-effective and the more the US officials pressure China, the longer it will delay the RMB appreciation process."
Victoria Mio, Fondsmanagerin des "Robeco Chinese Equities D EUR" (08.04.2010): "We think the Q1 macro economic data will be very strong, with double digit GDP growth and firming inflation pressure, therefore we expect monetary policies will continue to tighter further either in the form of increase in reserve requirement ratio or interest rate. However, the tightening expectation has been priced into the Chinese stock market, which is why it has been lagging global emerging markets year-to-date. The confirmation of tightening may turn out to be positive to the Chinese market as it will remove the uncertain on timing and policy directions.
With regard to the future path of the Renminbi, through our recent trips to mainland China we have already concluded that China is ready to allow the renminbi to resume its gradual appreciation: several ministries had been doing simulations and studies on the impacts of RMB appreciation. Then the Central Bank governor said that the current arrangement (while appropriate for the crisis period) will likely be changed when the exit strategy is completed. Also Premier Wen stated that China will ‘push further ahead with the reform of the renminbi (RMB) exchange rate formation mechanism’. This wording had not been used since July 2008 when the new peg was in place. Therefore, reading between lines, it implies that RMB appreciation will be in the cards, helped by favorable conditions for an appreciation as export growth and inflation have picked up. On a stock level, companies with large sums of foreign currency debts or foreign currency costs, such as Chinese airlines and pulp & paper companies, will benefit directly from a stronger Chinese currency."
Frage 4:
e-fundresearch: "Wie ist Ihr genereller Marktausblick für China Aktien in den kommenden 12 Monaten? Wo ergeben sich Chancen und wo liegen die Risiken?"
Magdalene Miller, Fondsmanagerin des "Standard Life IG SICAV China Equities A" (08.04.2010): "We are positive on the general outlook for the Chinese stocks that we have as we can still see profitability improving with their product/market positioning beyond what is priced in. With the tremendous credit growth last year, there is risk of misallocation of capital - thus some sectors with overcapacity problems should be avoided. There is also the ´exit risk´ from Govt stimulus. In terms of opportunities, we see ample. Consumption areas, which a lot of investors have been all over, are still fertile ground for stock hunting but one has to differentiate cyclical from secular growth as well as be very wary of the level of competition. Within consumer stocks we like healthcare, internet and auto (parts makers and some manufacturers)."
Martha Wang, Fondsmanagerin des "Fidelity Funds - China Focus A" (07.04.2010): "In terms of the markets, there could be some short-term volatility on the back of recent tightening policy given the change in underlying profit dynamics. Although there has been some concerns towards the magnitude of tightening, it is unlikely that the government will endanger the recovery. The overall intentions have not changed in that the government is still pursuing growth and the current dampening moves are more to protect the long-term growth.
I am positive on the export sector. With the export indicator now in positive territory since December 2009, margins on exports should improve in 2010. The recent news of labour shortage in the regions that saw heavy redundancies in China during the financial crisis indicate that manufacturing is indeed returning."
Yi Tang, Fondsmanager des "Saint-Honore Chine A" (14.04.2010): "We expect China GDP to grow by at least 9% - 9.5%. Corporate earnings are expected to grow by 25% this year. Currently the market is trading at 12x forward PE. We think the Chinese market offers good upside potential for the next 12 - 18 months.
We continue to favor long term secular growth stories, including healthcare, industrials, consumer discretionary. Alternative energy and environment protection related sector are also in the sweet spot. We believe telecommunications is likely to outperform this year because of attractive valuation after 2009 underperformance. We stay cautious on property, and do not hold any Chinese banks as we see long term asset deterioration risks and near term capital raising overhang. Within financials we prefer insurance due to the low insurance penetration in China."
Howard Wang, Fondsmanager des "JF China A Dist USD (06.04.2010): "2010 will be a good but volatile year for Chinese equities. Our thesis takes into account (1) policy normalization around the world, (2) potential capital outflows stemming from strong performance in 2009, sovereign debt crisis fears and US dollar strength, (3) our long-term confidence in the Chinese economies.
• We expect the Mainland economy´s GDP will expand by around 10% in 2010.
• Concerns about imminent aggressive policy tightening derailing the current trend are unwarranted. The Chinese government will err on the side of a late exit rather than an early exit from its stimulus programs, given both the political and economic considerations.
• We expect growth will continue to be underpinned by robust domestic consumption*. Although having already taken steps to slow capital spending, the authorities will stay devoted towards home demand given exports have yet to fully recover while China aims to move towards a more balanced long-term economic growth model where domestic demand will become the major motivating force.
• 2010 will see fixed asset investment growth come off from its elevated level last year, probably from over 30% to 10%-15%. CPI pressure will potentially go higher mid-year due to the low base effect and higher food prices.
• Liquidity, whilst under strict scrutiny, should be enough to sustain high GDP growth, as Beijing is conscious of the link between employment and social stability.
*China has much scope to boost private consumption (China 35% - consumption as a % of GDP). There is significant long-term potential for the expansion of domestic demand. With high savings rates, rising wages and the growth in personal credit, the propensity for consumers to spend is increasing and this can be seen throughout a wide number of consumer plays. China has relatively low levels of debt, particularly consumer debt which as a percentage of GDP is only 13% in China. This compares to the US, where consumer debt as a percentage of GDP reached a record 99% at the end of 1Q09 while the ratio in the UK is running at 100%. This debt burden means the West likely faces an extended period of structurally lower growth due to private sector deleveraging.
China will continue to develop for many more decades to come. Although it is already the 3rd largest economy, and looks set to be the 2nd largest next year, it remains a very poor country, 60% of the country still rural, and with PPP adjusted per capita GDP at less than $6000 USD, compared to nearly $50,000 for the US, and the $40-50,000 range for developed Asian economies (Hong Kong, Singapore). (MS Estimates as of 31 Dec 2009). The structural trends of urbanization and industrialization will continue in China for decades to come, presenting us with continued investment opportunities. Given China in 2010 will grow around 10% (while the developed world continues to face sluggish growth prospects for the year), we believe that the gap between China and the rest of the world will gradually close, but it will take decades for China to reach developed world standards.
The main risks to the positive outlook in China are Inflation, Currency, Protectionism from the West and Policy Risks (the timing of the government’s exit strategy from Stimulus)."
Christina Chung, Fondsmanager des "Allianz RCM China - A - USD" & "Allianz RCM China Fund - A - USD" (08.04.2010): "Range bound in 1H/2010 due to some headwinds. These include 1) concern on policy tightening 2) inflationary pressure 3) capital raising in the banking sector. These are capping the performance of the Chinese stocks. Once these headwinds are digested, we see another round of strong bounce as fundamentals remain still strong despite above mentioned headwinds. Therefore we see share price correction as a buying opportunity. Medium-to-long term risk includes 1) potential bad-debt accumulation in the local government level 2) transition risk (from export-oriented economy to domestic consumption driven economy) and we will monitor how things develop in these area."
Samantha Ho, Fondsmanagerin des "Invesco PRC Equity USD A" (09.04.2010): "We are generally bullish on China stocks over the coming year with stocks currently trading at a discount to average historical valuations and near trough. On the sector level, we are especially excited to see that selected industrial companies have announced better than expected earnings results, as these companies were able to minimise the impact of slowing global demand by shifting their focus from export-oriented production to producing for domestic economies (paper producers would be a good example). We believe that, based on our bottom-up research capabilities, we can further identify similar opportunities, which can serve as a meaningful catalyst for a re-rating as domestic opportunities expand. Inflation risks exist; should CPI inflation increase faster than expected, the government may be forced to take more aggressive measures. Having said that, our view is that CPI inflation is unlikely to surprise on the upside and that it should peak towards the end of Q2 as the low base effect diminishes."
Douglas Turnbull, Fondsmanager des "Neptune China A Acc" (08.04.2010): "In terms of opportunities, these follow the key themes of the fund, which are the long term secular growth stories that the ongoing transition in China´s economy yields, specifically the rise of a newly enriched, consumption-minded, emergent middle class. The other major secular theme to emerge is the physical wherewithal required to build out growth, that is, the enormous expansion of China’s infrastructure.
The outlook for China in 2010 is for a continuation of the strong growth that was established last year. That ought to mean a combination of private investment (notably the property construction cycle restarting, with the beneficial trickle-down effects which that entails), domestic consumption and a return to growth in exports taking over from unsustainably high levels of fixed asset investment. Whilst this leads to a positive economic outlook, there is an inevitability that strong growth will also lead to incremental tightening measures as the government withdraws stimulus measures that are no longer required. Nevertheless, markets hiccoughs driven by concerns over ‘tightening’ policies replacing ‘growth’ ones should be seen as opportunities to buy; no-one likes taking medicine, but everyone likes being healthy- we are glad to see healthy growth promoted."
We see growth, albeit healthier and thus more moderated, continuing. We see policy being incrementally less supportive as it is less needed and we see the market performance being driven more by earnings coming through than simply multiple expansions. There could be some headwinds in the short term, especially for financials but also for the wider market driven by macro uncertainty, but as before these should make good buying opportunities, especially in light of the long term bullish proposition.
Victoria Mio, Fondsmanagerin des "Robeco Chinese Equities D EUR" (08.04.2010): "In short, 2009 was a year of beta - getting market directions right, and 2010 may very well become the year of alpha - selecting the right stocks. Investors will need to rely on their forecasting abilities, an altogether more onerous task. But it will be a rewarding season for fundamental stock-pickers. - We believe the Chinese stock markets still provide decent upside potential. The correction in early 2010 has represented good buying opportunities.
There are plenty of investment opportunities as favorable macroeconomic surprises and positive management guidance during the 2009 result season have prompted the broker community to embark on a new wave of earnings upgrades. While the market in general remains quite cautious in anticipation of further tightening and the launch of index futures in the A share markets, we have turned more bullish for the coming months. In our view the market’s concerns about the potential impact of policy changes have been fully priced in. Once the expected policy tightening materializes, be it in the shape of a RRR hike, a rate hike, or clear signs of RMB appreciation, it can turn into a positive catalyst, causing the market to break out of its current range-bound pattern and focus on the positive macro and earnings outlook again.
The risks may not be neglected: if property prices continue to rise in the coming months, this may lead to more tightening policies, which would hurt equity market sentiment. The fund-raising exercise of the banking sector will also weigh on the market due to substantial supply of stocks in the market. Sentiment in banking stocks has been depressed as banks plan to issue more shares (and possibly bonds) to replenish capital balancing their aggressive lending since 2009. Due to the significance of the financial sectors in the index, the index performance has been disappointing, moving sideways. However, most of the Chinese banks have announced their fund raising amounts and strategies, and also reported slightly better than expect 2009 results. All the uncertainties have been largely priced in. Therefore, the banking sectors will start to delivery performance in the coming months because their stock prices have been severely published and value has already emerged.
Valuation wise, the MSCI China index is now trading at forward P/E of 13.9x and forward P/B of 2.2x, in line with their historical averages. When comparing China to the Asian average, it has been valued slightly cheaper. Therefore, risk is largely to the upside at this point. In anyhow, the consumer, internet, and health care sectors can continue to perform due to superior growth and earnings visibility. As we mentioned in our January outlook, the year of the tiger is the year of alpha: stock selection remains the most important performance driver, and that has been our focus."
Frage 5:
e-fundresearch: "Welche geopolitische und wirtschaftliche Rolle wird China mittelfristig übernehmen und welche Auswirkungen kann dies auf die Finanzmärkte haben?"
Magdalene Miller, Fondsmanagerin des "Standard Life IG SICAV China Equities A" (08.04.2010): "China´s significance as a global political and economic player will continue to grow. China has been a major destination for foreign direct investment for years and will continue to be so, given its competitive manufacturing base and ongoing move up the technology curve. However, the role China itself plays as an investor is often overlooked. Chinese corporates are now becoming some of the most important investors into other emerging markets in Asia, Africa and Latin America. Chinese ODI (Overseas Direct Investment) totalled US$43bn in 2009 and is likely to rise further this year. Also, China is arguably now the world´s most important buyer of oil, with Saudi Arabia´s monthly exports of Crude oil to China recently surpassing those to the US.
China´s rise as a financial market, while spectacular, is far from complete and Chinese equities will continue to become more important as an asset class. Hundreds of Chinese companies have come to the market in recent years but many more IPOs remain in the "pipeline" and when these come to market they will add not only to the capitalisation of the Chinese market but also to its breadth in terms of investible companies and sectors. It is interesting to note that while Chinese GDP has already reached over 8% of total global GDP, Chinese companies still make up less than 2% of the MSCI All Countries World Index - a figure which is likely to rise substantially over time."
Martha Wang, Fondsmanagerin des "Fidelity Funds - China Focus A" (07.04.2010): "I believe the recent credit crisis has shown China’s ability to de-couple from the west during crisis times. The rapid urbanisation and subsequent boost in domestic consumption is deriving the growth from within.
Given the economic recovery, I do expect some of the stimulus policies implemented during the crisis times to be wound down gradually.
I am currently not so concerned with the potential bubble risk in China. The market valuation seems quite reasonable, especially given the recent correction. The H-shares for example are currently trading at around 2x P/B and 10x P/E. I believe there was a bubble forming in some areas amid the government’s stimulus last year but the government policy response has been quite pre-emptive. The economy is showing positive signs of recovery, including export growth which has turned positive. As a result, the government has moved back towards policy normalisation. The underlying economic development is also encouraging, especially the growth experienced in the inland areas."
Yi Tang, Fondsmanager des "Saint-Honore Chine A" (14.04.2010): "Further integration of Chinese economy into world economy. Chinese corporates would continue to acquire both foreign brands and technologies and raw materials. China is also becoming a bigger and bigger market for consumer products ranging from luxury cars to agriculture products.
Within Asia, China would take a more prominent role. Chinese companies would continue to move up the value chain and move low end manufacturing to neighboring countries such as Vietnam.
China has started to push the use of RMB in regional trade. China would gradually open its capital account and move toward full convertibility of the RMB. This would mean that the domestic A-share markets would gradually be included in global equity indices. Demand for Chinese assets would increase as a consequence."
Howard Wang, Fondsmanager des "JF China A Dist USD (06.04.2010): "Please refer to the answers given above."
Christina Chung, Fondsmanager des "Allianz RCM China - A - USD" & "Allianz RCM China Fund - A - USD" (08.04.2010): "China is already the 3rd largest economy in the world and soon it will take over Japan and become the 2nd largest economy. Still China accounts for only around 2% of the MSCI World index due to its relatively closed market nature and currency conversion issue. This shows a disconnection between economic reality and investors´ China allocation in their portfolios. It is a matter of time for China to take its fair share in the World index."
Samantha Ho, Fondsmanagerin des "Invesco PRC Equity USD A" (09.04.2010): "In a global environment where growth in developed markets is expected to be muted, China (and other emerging markets) will be regarded as the global growth engine. China was previously considered the world´s factory, but it is now also one of the world´s biggest consumers. One example would be auto production, where China has surpassed the US as the biggest auto market in terms of vehicles sold. From a financial market angle, we believe that China is very much under-represented by market indices, with China accounting for only <3% of the MSCI AC World, whilst accounting for over 11% of GDP on a PPP-(Purchasing Power Parity)-adjusted basis. We believe this will change over time as global investors change their asset allocation mindset and search for growth."
Douglas Turnbull, Fondsmanager des "Neptune China A Acc" (08.04.2010): "Whilst US-China relations will no doubt continue to garner significant headlines, and there will surely be more skirmishes over various issues, we believe that the bark is far worse than the bite. Politicians on both sides are permanently under pressure to play to their respective home galleries and thus will continue to posture and sabre-rattle periodically, but more importantly politicians on both sides understand the interconnected, even interdependent nature of the Sino-American relationship.
On the domestic front, the government is very consciously seeking to address the imbalance in development levels and wealth between the eastern coastal urbanised strip and the western rural hinterland. As they put in place better social security provisions, which over time ought to reduce the necessity to save, and build out the infrastructure to spread growth and its income raising benefits ever wider, the consumer base too will widen. In the even longer term, there could be another leg to China’s consumption growth story. Personal credit is still a tiny fraction of bank lending, and this is almost exclusively in mortgages. As this increases over time, it will have an enormous impact, as it has done historically elsewhere. In all, it is hard to overstate the scale of the advancement and the pent up consumer demand to come.
Policymakers tend to be explicit in their aims and goals. The purest expression of this is shown in the system of 5-year plans- essentially detailed long-term budgets – which most of the government´s projected expenditure is still dictated by. So, the current picture is that this commitment is still intact, and the fund remains positioned accordingly. However, 2010 should also see a widening out of the focus of growth so as to be less reliant on solely government investment."
Victoria Mio, Fondsmanagerin des "Robeco Chinese Equities D EUR" (08.04.2010): "China´s elite has the ambition to strive for a larger political profile on a global scale, be it via securing their access to resources by exploring other emerging markets like Africa, facilitating RMB settlements with their strategic trade partners, taking a vital role in brokering political conflicts like in North Korea or aspiring for more influence in supranational bodies such as the United Nations, WTO and IMF. Obviously the catching-up process of China versus developed nations has accelerated through the financial crisis. The analysts are only disagreeing on the time but not the fact that China will eventually overtake the United States as largest economy. But the impact of this emerging superpower will not only become dominant in ranking tables but is also reflected in both tactically and strategically higher investment allocations to Chinese equities. Growing supply to Chinese stock exchanges - becoming a better and more representative reflection of the real economy - can meet these investment demands although this adjustment process will at times cause overshooting of investors’ behaviour to both extremes. China’s 2009 GDP is 8.3% of global GDP, but Chinese equities weight in MSCI global index is only 2.3%. There is still a long way to go for Chinese equities representation in global equities to catch up with its economic importance.
Economically speaking, China´s evolution continues to be supported by four structural growth trends: 1) globalization (as a low-cost, highly efficient manufacturing center which benefits enormously from outsourcing, moving up the value chain to sustain productivity gains); 2) industrialization (driven by globalization and bolstered by accelerated investments in infrastructure, education and healthcare in the central and western regions in China); 3) urbanization (an effect of massive industrialization, rising affluence in China´s tier-1/-2 cities and high mobility of migrant workers); and 4) boost of domestic spending power (on the back of more available jobs and a higher disposable income).
However, top policymakers are well aware China´s growth model needs to change and become less dependent on Western export markets. Hence, considerable steps are undertaken to balance the economy in three major ways: A) regionally (favoring Western China over Central over East); B) across social classes (targeting a smaller gap between rural and urban incomes); and C) promoting domestic consumption as the key driver for sustainable GDP growth (via subsidies to buy white goods, establish distribution channels in the rural areas, providing a better health care infrastructure and insurance coverage). The sheer potential of Chinese consumer markets has made them the new "battle ground" for globally launched product innovations.
On the corporate front, the revitalization plans for 10 selected industries aim at consolidating industries with structural overcapacity, promoting innovation and upgrading industries. Such measures will help to make the country more appealing as technological location of choice. China investors often loose sight of this larger "masterplan" and tend to overreact on short-term headlines. New policy announcements and the embedding of government intentions in public opinion will continue to cause spikes in stock market volatility. We regard the subsequent larger swings as opportunities for longer-term oriented Chinese equity investors and advocate focusing more on the big picture."
Alle Daten per 30.03.2010 in Euro:
