e-fundresearch: "Which fundamental factors are currently the most important ones when you assess China stocks?"
Magdalene Miller, Fondsmanagerin des "Standard Life IG SICAV China Equities A" (13.07.2010): "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."
Joseph Tse, Fondsmanager des "Fidelity Funds - China Focus A" (13.07.2010): "I focus on sound businesses or those with improving fundamentals that are trading at reasonable valuations; identifying such stocks is the key to achieving longer-term outperformance. Additionally, I favour globally competitive companies with a proven management track record of creating shareholder value on a sustainable basis. These fundamental factors I focus on have not changed over time."
Bin Shi, Portfoliomanager des "UBS (Lux) Equity Fund (Greater) China" (09.07.2010): "We look for companies with that have good growth stories and are attractively valued from a mid-long term perspective. We tend to focus on companies with the ability to manage economic cycles well or with the ability to power through cycles. Adjustments are made to the portfolio based on stock valuations and changing economic backdrop."
Mads Kaiser, Portfoliomanager des "Jyske Invest Chinese Equities" (13.07.2010): "We believe that financial markets are efficient in the long run. But in the short term the existence of behavioural biases can cause stocks to trade away from their fair value. Hence we focus on three key factors when we judge an investment: valuation, momentum and strength – we basically prefer relative cheap companies with good earnings momentum and high return on invested capital.
We choose our holdings using a bottom-up approach by combining quantitative screening and fundamental analysis. This helps us to continue to be objective and provides us with a strong buy and sell-discipline.
We tend to keep sector weights neutral to benchmark and diversification high."
Yi Tang, Fondsmanager des "Saint-Honore Chine A" (13.07.2010): "As fundamental stock pickers with a value-bias, we look for:
• Industries with long-term growth potential
• Companies with leading or differentiating positions within its segment
• Management quality and corporate governance
• Financial strength and depressed valuation, especially after the market correction YTD."
Christina Chung, Fondsmanagerin des "Allianz RCM China - A - USD" (12.07.2010): "Based on the scenario that we have relatively mild inflationary pressures and that economic momentum continues to be quite strong, we believe that corporate profits and earnings are very important for assessing Chinese equities."
Agnes Deng, Fondsmanagerin des "Baring Hong Kong China USD" (13.07.2010): "We will continue to focus on company fundamentals and earnings growth."
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.
Howard Wang, Fondsmanager des "JF China A Dist USD" (13.07.2010): "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."
e-fundresearch: "Which over- and underweight positions are currently implemented in China or Greater China funds?"
Magdalene Miller, Fondsmanagerin des "Standard Life IG SICAV China Equities A" (13.07.2010): "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 Govt control."
Joseph Tse, Fondsmanager des "Fidelity Funds - China Focus A" (13.07.2010): "I currently hold an overweight position to the consumer discretionary sector. The growth of the middle class as well as recent labour wage increases in China are likely to result in greater consumer spending power and boost consumption.
Conversely, I have an underweight exposure to the energy sector, where policy reform represents a major risk in stock performance. For example, the implementation of contract-price guidelines at the end of June by the National Development and Reform Commission (NDRC) has resulted in an 11% drop in Chinese thermal-coal equities during the eight days in July."
Bin Shi, Portfoliomanager des "UBS (Lux) Equity Fund (Greater) China" (09.07.2010): "Consumer and Health Care remain our preferred sectors as mid-to-long term growth outlook remain intact.
We maintain our cautious view towards cyclical sectors and remain selective and growth-oriented, although risk/return becomes attractive after market correction."
Mads Kaiser, Portfoliomanager des "Jyske Invest Chinese Equities" (13.07.2010): "As an investor in China you typically feel: the market looks cheap – but not the names I want to invest in. There is a lot of cheap “price takers” in the materials space troubled by overcapacity, cheap banks with very little transparency and cheap real estate developers that faces a lot of policy pressure. And on the other hand you have a lot of consumer and healthcare names with high, visible growth – where all the good seems discounted.
We choose to own all types of companies – and hence we expect (and want) our relative return to be driven by stock specific factors – not macro factors. We expect +80% of our relative risk/return to be stock specific.
That said, we think investors are too skeptical on banks and select industrial names. We think investors are paying too much for some high growth consumer names. We prefer some of the “capex” sectors like IT and industrials to some of the more defensive sectors like consumer staples and telecommunication.
On industry level we are overweight capital goods, real estate, banks, technology, consumer durables, auto, energy and pharma. We have and underweight position in retail, insurance, food retail, transportation, utilities and telcos."
Yi Tang, Fondsmanager des "Saint-Honore Chine A" (13.07.2010): "In our portfolios, we are currently overweight in industrials, materials and IT, while underweight in financials, energy, consumer staples and utilities."
Christina Chung, Fondsmanagerin des "Allianz RCM China - A - USD" (12.07.2010): "Firstly, the relative positioning against benchmark is a result of bottom-up stock selection. Currently we are overweighting consumer, industrials and IT services while underweighting banks, property, energy and telecoms."
Agnes Deng, Fondsmanagerin des "Baring Hong Kong China USD" (13.07.2010):
"Overweight (Domestic consumption plays)
Consumer sector: sector is trading at premium to the overall market as its policy risk is low and earning’s revision should be strong.
Information Technology sector: Positive on increasing capex by domestic telecom carriers and raising demand from corporate PC replacement cycle.
Healthcare: short term pull back of the share price may represent good long term investment opportunities. The sector is still premature and fragmented. We are increasing exposure in the sector mainly through overweighting healthcare product distribution network.
Underweight (Fix asset Investment related sectors)
Material: One of the sectors we are looking to rebuild position on further correction. Share prices have been de-rated on the back of a rather resilient underlying commodity prices.
Energy: Reducing overall exposure after strong run in 4Q on the back of the strong seasonality.
Telecom sector: A defensive sector offer better earnings visibility but long term growth is low."
Howard Wang, Fondsmanager des "JF China A Dist USD" (13.07.2010): "The core strategy of the JPMorgan Funds – JF China Fund remains unchanged, with an emphasis on domestic-oriented stocks, such as selected stocks in the retail, financials, property and infrastructure sectors."
Frage 3:
e-fundresearch: "What is you general outlook for China and Greater China stocks over the coming 12-18 months? Where do you see opportunities and where are the risks?"
Magdalene Miller, Fondsmanagerin des "Standard Life IG SICAV China Equities A" (13.07.2010): "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)."
Joseph Tse, Fondsmanager des "Fidelity Funds - China Focus A" (13.07.2010): "My medium term view on the Chinese stock market remains positive. Rising demand for goods and services from higher-paid workers should translate into positive drivers in consumer names. Over the longer term, I believe secular trends such as an improving social security network, demographic changes and rapid urbanization will significantly benefit China’s domestic consumer sectors.
In terms of risks, continuous tightening measures may negatively affect investor sentiment. A prolonged economic slowdown in the US and Europe, together with the appreciation in the yuan, may weigh on China’s export and production industries."
Bin Shi, Portfoliomanager des "UBS (Lux) Equity Fund (Greater) China" (09.07.2010): "The China market is likely to range-bound in the near term as overall economy is still digesting the impacts of credit and property tightening. However, moderating economic activities and stabilizing property market suggest that the tightening measures are taking effect, and we think the chances of introducing additional tightening measures are low going forward. In addition, latest policies such as reinforcing old capacity closure, promoting energy-saving vehicles and pharmaceutical industry, also suggest the government is determined to encourage structural change in Chinese economy. We remain upbeat on overall Chinese economic growth, in spite of signs of slowdown. China equity market is once again trading below historical average given market correction year-to-date, which offers good opportunity to accumulate quality stocks for mid-to-long term."
Mads Kaiser, Portfoliomanager des "Jyske Invest Chinese Equities" (13.07.2010): "We expect China to do well in a global context. We like the solid growth we see currently – including strong growth in the SME segment. That said we fear that in the coming months we will move through a period of downgrades – to earnings as well as GDP. Hence we see stock markets range bound for now.
We expect the late part of 2010 and 2011 to be better – driven by strong earnings and investor focus on the next 5-year plan (more forward looking – less fear). We see/expect no hard landing in China – the cooling of housing market is driven by the central government – not lack of demand. We expect investments and private consumption to continue to be strong.
Chinese workers will get solid wage increases (not excessive), inflation will be moderate, household debt is low, savings high and credit increasingly available – all factors form a strong foundation for consumption growth.
The main risk to our scenario is the state of the financial sector in Europe and consumer confidence and consumer demand in the US. But if either of these fail maybe China isn’t the worst place to invest."
Yi Tang, Fondsmanager des "Saint-Honore Chine A" (13.07.2010): "We see good upside potential for the Chinese market in the coming 12-18 months. We believe that the policy tightening cycle has peaked. We have also noted that the tone of policy makers has already softened since June with inflation under control and property prices coming down by 10-20% since April. Under a less hawkish policy environment, investors’ risk appetite should return. With MSCI China trading at 13x 2011 PE, or the low end of its historical range, valuation is attractive with forecasted EPS growth of 20%.
At this point in the market, we favour cyclical stocks such as basic materials. The sector is affected by a substantial economic slow-down, which is to us overly pessimistic. Also, we continue to find telecom stocks attractive as the market has yet to fully appreciate the sector’s profitability and its ability to generate cash flow. We also see opportunities in banks given the very reasonable valuation, though we are concerned about their long-term asset quality after last year’s state-led lending program. Even though we like healthcare for its long term secular growth potential, we are skeptical about the sector’s rich valuation, especially given the high earnings expectations."
Christina Chung, Fondsmanagerin des "Allianz RCM China - A - USD" (12.07.2010): "We maintain our positive view on Chinese equity as we have high conviction in the long-term structural trends which we see developing in China. We are not trying to time the market cycles, but to identify sectors which we believe will benefit from long-term structural growth. For example, we see the automobile sector is benefiting from the growing household income and consumer demand. The risks we see are more cyclical or political related which is hardly predictable."
Agnes Deng, Fondsmanagerin des "Baring Hong Kong China USD" (13.07.2010): "We believe the possibility of a hard landing scenario in China remains to be low given the stronger than expected consumption demand and continuing infrastructure investment will drive the economic growth. Export recovery maybe somewhat impact by the external volatility but overall restocking demand from the Western world remains healthy. On the other hand, we expect the concern on macro-tightening in China will gradually lessen. Most importantly, we think the current market valuation has become very attractive relative to the long-term growth potential in China."
Howard Wang, Fondsmanager des "JF China A Dist USD" (13.07.2010): "We believe that once the government and senior leaders start to ease their "tightening" tone, the market is likely to experience a relief rally. The property measures were introduced to stabilise housing prices, not to cause a sharp drop-off in construction activity or in overall growth. With the government increasingly concerned about global downside risks, we believe that property restrictions and monetary policy may be relaxed once it is clear that property prices have stabilised and/or global demand have started to weaken sharply.
Another potential policy catalyst to revive investor sentiment and interest in the Chinese equity market would be the long-awaited appreciation of the RMB. We expect a mild RMB appreciation for the rest of 2010 in the range of 3-5% when it will be in China´s interest to do so, e.g. if inflation rises
over 3%. RMB revaluation is a long-term trend, and is something that we have been expecting (at a gradual pace) over the past several years. Our funds would generally benefit from RMB appreciation given our large overweight in domestic-oriented stocks (property, consumer, insurance, selected banks) and our large underweight in exporters/manufacturing companies in China.
Although markets may range trade in the short term, we would view corrections as entry points on the back of our views that China´s economic growth will remain strong in 2010, inflation remains under control, and the visibility of the earnings recovery at the corporate level remains high.
Valuations appear relatively attractive for longer-term investors, with our investment universe of Chinese stocks listed in Hong Kong trading at under 13X forward P/E on 25% 2010 expected earnings growth. Within a regional context, we retain our strategic preference for China and would look for further weakness to increase our weightings in the market."
e-fundresearch: "Which impact do you still see from the economic stimulus packages in China?"
Magdalene Miller, Fondsmanagerin des "Standard Life IG SICAV China Equities A" (13.07.2010): "We are starting to see the growth from the economic stimulus packages fading. Fixed Asset Investments growth has slowed to a yearly growth rate of 24% in May from over 30% last year. Auto production and Home appliances have seen some weakness in recent demand despite futher subsidy programmes until the end of the year."
Joseph Tse, Fondsmanager des "Fidelity Funds - China Focus A" (13.07.2010): "As a part of the economic stimulus packages, infrastructure planning (including railways network and ports) will continue to provide employment opportunities. I believe the infrastructure planning will turn China into a country with more inter-city linkages and thus enhance trades and citizen mobility.
In addition, the Chinese government has one of the healthiest balance sheets in the world. This in turn, enables policymakers to execute fiscal and monetary policies with greater flexibility."
Bin Shi, Portfoliomanager des "UBS (Lux) Equity Fund (Greater) China" (09.07.2010): "The stimulus packages were mainly focusing on infrastructure spending (railway in particular), public housing development, rural development, and technology innovation. Overall, we still see significant impact from the stimulus packages and expect continued impact through out the year :
1] railway investment continue to grow on top of 2009’s high base and likely to reach record high with Rmb700bn in 2010
2] Property investment continue to recover year-to-date and land supply for public housing will be increased significant starting 2010
3] Home appliances and Auto sales remain robust so far in 2010 given renewed government subsidies to encourage rural consumption
4] we also see obsolete capacity upgrades and industry consolidation accelerated in sectors such as steel and cement."
Mads Kaiser, Portfoliomanager des "Jyske Invest Chinese Equities" (13.07.2010): "We see China cooling down. We think the central government wants to cool down growth to a more sustainable level – to avoid asset bubbles. Gradually less stimulus is right way to handle the current situation and we believe the policy will benefit investors in the best long term.
China – opposed to most western economies – has a lot of fiscal firepower, that might come to play if we experience a global double dip.
Inflation is also a main reason for lifting the foot off the speeder. China has no reason to continue pushing the economy to see Australian, Brazilian and Indian mining companies or global oil companies getting all the benefits."
Yi Tang, Fondsmanager des "Saint-Honore Chine A" (13.07.2010): "Recently, NDRC announced a major investment plan for 23 infrastructure projects in western China, marking a re-launch of “Go-West” strategy. Also, the RMB4 trillion stimulus package introduced in 2008 should still support economic growth as infrastructure projects normally take 2-3 years to complete.
Subsidies for auto and home appliances have been extended with certain adjustments, and should continue to encourage consumer spending. Medical reform and other social infrastructure investment will also be an ongoing process."
Christina Chung, Fondsmanagerin des "Allianz RCM China - A - USD" (12.07.2010): "Given the fiscal strength of China, we do believe that China has significant room to roll out further stimulus packages if needed."
Agnes Deng, Fondsmanagerin des "Baring Hong Kong China USD" (13.07.2010): "In benefit of the economic stimulus packages in China, we still believe the expected consumption demand and continuing infrastructure investment will drive the economic growth."
Howard Wang, Fondsmanager des "JF China A Dist USD" (13.07.2010): "We believe the re-balancing of China´s economic structure from an investment-driven to an increasingly consumption-driven growth model could accelerate, supported by RMB revaluation, the government’s efforts to improve the social safety net (education, healthcare, public housing, etc.) as well as rising wages/household incomes (away from Infrastructure). However, the transition could cause some growing pains in the short term while China’s investment growth could have peaked and thus GDP growth could moderate towards 8% from the past 10-year average of around 10%."
Frage 5:
e-fundresearch: "How do you assess the currency policy in China and which impact does this have on the stock market?"
Magdalene Miller, Fondsmanagerin des "Standard Life IG SICAV China Equities A" (13.07.2010): "Ahead of the G20 at the end of June, China announced that the RMB is depegging from the US Dollar. This is partly a political gesture but a stronger RMB also means that Chinese consumers will enjoy better purchasing power. This is one of tools for the Govt to shift economic growth drivers from external to domestic demand. The Chinese Govt has announced a number of other measures such as limiting carbon emission and restricting some heavy industry investment, it is steering the future growth on a more sustainable path. In terms of stock market implication, we expect consumer demand continues to be strong while the quality of living to improve - thus our overweight positions in Consumer discretionary and Healthcare. On the other hand, heavy industry with over capacity problems, like steel, will continue to be under pressure as Chinese growth changes from capital investment to good and services driven."
Joseph Tse, Fondsmanager des "Fidelity Funds - China Focus A" (13.07.2010): "It was widely expected that China would allow a gradual appreciation of the yuan, in order to help control inflationary pressure. I see this move as a part of an overall strategy to promote long term sustainable growth in the economy as it boosts domestic consumption and reduces dependence on exports. Chinese companies that derive earnings from domestic consumption industries and report earnings in foreign exchanges as well as those companies importing goods from outside of China are likely to be key beneficiaries. In contrast, those sectors competing on low earnings margins and labour intensive industries rely mainly on export revenue are likely to be negative impacted as they will further suffer from wage inflation and reduced margins."
Bin Shi, Portfoliomanager des "UBS (Lux) Equity Fund (Greater) China" (09.07.2010): "Move was somewhat expected and is desirable and timely (just before G20 summit). This should help reduce inflationary pressures in the short run and help rebalance the Chinese economy over the long run. This might help to balance global trade in the long run but we do not expect any drastic impact. After all, the RMB appreciated between 2005 and 2008 but China´s exports grew as well - i.e. many other factors matter as well. As a whole this should be mildly positive for China equity markets, though it would likely hurt some exporters."
Mads Kaiser, Portfoliomanager des "Jyske Invest Chinese Equities" (13.07.2010): "In general we think the RMB-appreciation story is underappreciated by investors – could be a major theme for 2011. We think that currently investors are in a wait-and-see mode – very skeptical about the actual outcome of the latest policy change announcements. We think we will see a stronger RMB – to the very direct benefit of names like Air China (dollar debt) and china consumer stocks (lower import prices).
5% annual appreciation is possible again – and would certainly be appreciated by China investors and US exporters."
Yi Tang, Fondsmanager des "Saint-Honore Chine A" (13.07.2010): "In June, PBOC announced the de-pegging of RMB from USD. The announcement is in-line with our expectations. Since late last year, we have repeatedly stated that RMB should resume its appreciation against USD in 2010, no later than Q3, and likely before Q2. We have also stated that while the trading band for the RMB might be widened, we do not see any one-off adjustment as China is running a more balanced trade account as compared with 2007/2008.
We believe a gradual (e.g. <5% in the coming 12 months) pace of RMB appreciation will neither cause a significant slow-down for exports nor have a major impact on GDP growth. We believe Chinese manufacturers have been preparing for the RMB appreciation since the currency regime reform was first introduced in 2005. Chinese exporters have been in the upgrading process, climbing up the value chain instead of purely competing in the low-end segment. Labor costs, a large direct cost component denominated in RMB, is no longer a deciding factor. Nevertheless, we are cautious of those producers with thin margins but without a competitive edge. They are increasingly prone to earnings risk under rising raw material costs, labor costs and currency.
A stronger RMB will contain some imported inflation pressure. We believe the RMB appreciation move further reduces the risk of an interest rate hike this year, meaning that domestic liquidity should continue to improve. The move should also increase investors’ appetite for RMB assets, as well as capital inflows into both the mainland Chinese markets and the HK China markets. Sectors that benefit most would be those with either a USD cost base or foreign debt exposure, or both. The former would include petrochemicals, airlines, telecoms and some internet gaming companies. Certain property companies which have recently issued USD-denominated debt would fall into the second category."
Christina Chung, Fondsmanagerin des "Allianz RCM China - A - USD" (12.07.2010): "PBoC´s decision to exit from a strict RMB-Dollar peg has been well perceived by market participants. We expect a gradual appreciation process of RMB will benefit the structural shift of China´s economy towards a domestic demand driven growth model."
Agnes Deng, Fondsmanagerin des "Baring Hong Kong China USD" (13.07.2010): "The decision to move away from the US dollar peg comes earlier than the market was expecting, and reaffirms our positive stance on the renminbi and the Hong Kong and Chinese equity markets. Although a stronger renminbi will be negative for low-margin exporters who don’t have pricing power, we believe it is good news for investors in China for three main reasons. First, it reduces the threat of trade sanctions from the US, which would be negative for individual companies and increase the “risk premium” applied to the China equity market. It comes days before the important G20 meeting, and has already been welcomed by US President Obama as a “constructive step”. Second, it should help to contain inflationary pressures coming from goods imported into China, and therefore reduces the probability of aggressive monetary tightening through heavy-handed credit controls and/or consecutive interest-rate rises. Third, we believe it should support domestic consumption by boosting the international purchasing power of Chinese consumers.
In portfolios which invest in China, and our Global Emerging Market strategies, we favour domestic consumption stocks, financials and Chinese property companies, which are sensitive to the revaluation of the renminbi and should benefit from this long-term trend. In the case of Hong Kong, while we believe it would make long-term sense to change the peg from the US dollar to the renminbi, for reasons of financial stability and convertibility we expect the peg to remain unchanged for the moment. However, we do expect the scopeof renminbi-related business such as bond issuance to continue to expand in Hong Kong in the coming years, which should be positive for the financial sector."
Howard Wang, Fondsmanager des "JF China A Dist USD" (13.07.2010): "The PBoC announcement that the renminbi exchange rate will exit from its peg against the US dollar and return to a path of gradual appreciation, benchmarked against an undisclosed "basket" of currencies, should not have come as a big surprise. However, the news does have several implications for investors. The move to a more flexible currency regime should be welcomed by international investors as another small step in the China´s open-door policy reforms. It should help assuage US protectionist pressures in the short term at least and should put China on course for greater currency reform in the future.
Therefore, although the slow pace of appreciation against the US dollar will be unlikely to satisfy China´s critics in the US Congress over the longer-term, the ending of the dollar peg should remove the RMB as a bone of contention between the US and Chinese governments, at least for the remainder of this year. A stronger RMB will also allow scope for other Asian currencies, like the Singapore dollar, Malaysian ringgit and Korean won, to appreciate moderately against the US dollar and the euro in coming months.
From a macroeconomic point of view, the announcement should contribute to economic rebalancing and promote a needed shift away from export-driven growth to domestic demand-led growth. On balance, therefore, the Chinese currency announcement is positive and should reinforce the positive recent performance of Chinese and Asian stock markets in the short term."
Alle Daten per 30.06.2010 in Euro:
