Recently, global investment institutions have successively issued Chinese stock funds, buying at the bottom of A-shares and optimistic about the long-term investment value of Chinese stocks.
British and American investment institutions jointly take action
Recently, British asset management giant M& G Investment Company announced the launch of a Chinese stock fund, which is optimistic that China is "one of the most attractive long-term stock investment markets in the world". M&G stated that the launch of the fund comes at a time when the Chinese stock market is at the bottom of its valuation range, and many companies are increasingly focused on improving shareholder returns.
Source: M& G official website
According to M& According to the official website of G, the investment method of M&G China Fund will focus on approximately 300 Chinese stocks, which have been rigorously covered and selected through investment research for over 30 years. The goal of M&G China Fund is to provide higher total returns (including capital appreciation and dividend income) than the MSCI China with 100% China A Share Index within any five years. This fund typically holds 50 to 80 stocks and focuses on high-quality companies with strong balance sheets, sustainable cash flows, and attractive valuations.
The fund will be managed by David Perrett, who has over 30 years of experience in investment in China and the entire region. He will receive support from Jamie Zhou, the deputy fund manager based in Singapore, and the entire Asia Pacific equity investment team, which manages approximately $23 billion in assets in the region.
The team also represents M& The £ 129 billion dividend fund managed by G Life Insurance Company invests in Asian and Japanese stocks to further diversify its geographical allocation. In 2021, they were commissioned to invest in Chinese stocks, and the scale has grown to $1.14 billion. The launch of the Chinese stock fund this time is M& As part of its strategy to expand its investment capabilities and make it more open to external investors, particularly towards the UK wealth management sector, which is seeking to increase its global investment allocation.
At the end of August, KraneShares, a US based fund, also announced the launch of the KraneShares China Alpha Index ETF (KCAI) on the New York Stock Exchange.
Jinrui Fund stated that Chinese A-shares are undervalued in global indices, and allocating to Chinese A-shares may bring diversified returns; Chinese A-shares have unique characteristics and are an important source of alpha returns.
The characteristics of KCAI Fund are: selecting stocks from the stock pool of the Shanghai and Shenzhen 300 Index, with a single stock position in the ETF not exceeding 5%, and using AI investment decision-making technology for monthly rebalancing. The underlying index of KCAI Fund is the Qi China Alpha Index.
According to the official website of Jinrui Fund in the United States, as of September 11th, the top ten heavy holdings of the fund are: Zhongji Xuchuang, Fuyao Glass, Industrial Fulian, Guodian Nanrui, Changan Automobile, CICC Gold, Agricultural Bank of China, Shandong Gold, Huaxia Bank, and Bank of China.
As of September 11th, the top ten holdings of KCAI Fund are sourced from the official website of Jinrui Fund in the United States
Foreign institutions: can be more optimistic about the Chinese market
The undervaluation of the Chinese stock market is attracting more attention from overseas funds. We believe that the current market value of the Chinese stock market is not commensurate with its economic scale, and many stocks have attractive valuations. At the same time, many Chinese companies have shown increasing operational resilience in recent difficult times and are increasingly focused on maximizing profits and enhancing shareholder returns by increasing dividends and stock buybacks, "said David Peret, China fund manager and co head of the Asia Pacific equity investment team at M&G
In addition to continuous optimization within the company, many Chinese companies are also in a leading position in global growth areas such as renewable energy and digital supply chain management, "David Perrett further stated.
From a macroeconomic perspective, Lianbo Fund believes that China is likely to further promote loose policies in the future, and the loose cycle may continue for a long time. After recent market corrections, the Federal Reserve and the European Central Bank may cut interest rates earlier than previously expected, but the duration of their easing cycles is still unknown. In contrast, China has loose policies and a moderate inflation outlook, the continuous promotion of RMB internationalization, and the growth highlights of China's dual speed economy, which are worth investors' in-depth consideration and research.
Therefore, some voices believe that the Chinese market can be more optimistic. Zou Jiangyu, a mixed fund manager holding BlackRock Advanced Manufacturing for one year, believes that there was a significant adjustment in the A-share market in August, with growth sectors, especially technology related stocks, being greatly impacted. At the current moment, as the disclosure of interim reports by listed companies is gradually digested by the market, the overall valuation level of the market is also more attractive. At the same time, economic and market protection policies are expected to be further introduced, so we should be more optimistic about the market.
Looking ahead to the future, Zou Jiangyu maintains a positive outlook on companies in advanced manufacturing fields such as technology, automobiles, new energy, and high-end equipment materials. The trend of the artificial intelligence industry remains strong, and innovation in consumer electronics in the second half of the year is also worth looking forward to. China's global competitiveness in clean energy, automobiles, and other fields is expected to translate into more demand and orders, and breakthroughs in high-end equipment and materials are also continuing to make progress.
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