JF stays positive on Hong Kong, China shares
India and Indonesia also look good but TaiwanÆs tech sector should be avoided, it says.
Within an Asian equities portfolio, JF Asset Management is most bullish over China and Hong Kong and most bearish over Taiwan.
A healthy corporate earnings outlook and strong fund flows from investors in the mainland and elsewhere will continue to provide a ôgood catalystö for an extended bull rally in those markets, says Grace Tam, an investment services manager in Hong Kong at JF Asset Management, which manages $1.2 trillion worldwide and $120 billion in Asia.
Inflows from ChinaÆs qualified domestic institutional investor (QDII) program will continue to buoy Hong Kong shares while the eagerness of international investors to position themselves ahead of ChinaÆs continued growth will continue to buoy both stock markets, she says.
As reported by AsianInvestor earlier this month, China International Fund Management (CIFM), a joint venture between JPMorgan and the Shanghai municipal government, was able to raise a record-breaking amount for its QDII fund in a single day, totalling Rmb116.26 billion ($15.5 billion) . That brings to Rmb262.25 billion ($34.96 billion) the total funds raised by the four QDII portfolios that have been launched only since September.
ôWe can expect to see a lot more money buying into China-related shares, from investors in the mainland and overseas,ö says Geoff Lewis, head of investment services at JF Asset Management.
Although valuations of China shares are far too high compared with the rest of Asia, much of that is supported by the mainlandÆs economic growth, the potential for strong and sustainable earnings, Lewis says.
Lewis notes that China ôhas an increasingly important role in the world stageö. ChinaÆs consumption of commodities and its imports are on the rise, making it virtually impossible to overestimate that market, he says.
China and India, another powerhouse economy in Asia, now make up around 22% of global gross domestic product, matching the US share of global GDP, Lewis says.
JF Asset Management is overweight in China and Hong Kong, with the former referring to the H shares and red chips markets. It is also overweight, though to a lesser degree, in India and Indonesia.
Tam says corporate earnings prospects in India remain robust. She doesnÆt expect the current controversy over the proposed Securities and Exchange Board of India (SEBI) restrictions on participatory notes to have a long-term impact of the companies JF Asset Management invests in.
JF Asset Management is positive on Indonesia because of expectations of further interest rate cuts, which would free up more money for the stock market.
The bearishness on Taiwan is mainly due to JF Asset ManagementÆs distaste at the moment for technology shares, which are likely to bear the brunt of a US economic slowdown, Tam says.
Sector-wise, JF Asset Management is overweight in consumer plays, neutral in financials and underweight in technology, utilities, healthcare and exporters.
A healthy corporate earnings outlook and strong fund flows from investors in the mainland and elsewhere will continue to provide a ôgood catalystö for an extended bull rally in those markets, says Grace Tam, an investment services manager in Hong Kong at JF Asset Management, which manages $1.2 trillion worldwide and $120 billion in Asia.
Inflows from ChinaÆs qualified domestic institutional investor (QDII) program will continue to buoy Hong Kong shares while the eagerness of international investors to position themselves ahead of ChinaÆs continued growth will continue to buoy both stock markets, she says.
As reported by AsianInvestor earlier this month, China International Fund Management (CIFM), a joint venture between JPMorgan and the Shanghai municipal government, was able to raise a record-breaking amount for its QDII fund in a single day, totalling Rmb116.26 billion ($15.5 billion) . That brings to Rmb262.25 billion ($34.96 billion) the total funds raised by the four QDII portfolios that have been launched only since September.
ôWe can expect to see a lot more money buying into China-related shares, from investors in the mainland and overseas,ö says Geoff Lewis, head of investment services at JF Asset Management.
Although valuations of China shares are far too high compared with the rest of Asia, much of that is supported by the mainlandÆs economic growth, the potential for strong and sustainable earnings, Lewis says.
Lewis notes that China ôhas an increasingly important role in the world stageö. ChinaÆs consumption of commodities and its imports are on the rise, making it virtually impossible to overestimate that market, he says.
China and India, another powerhouse economy in Asia, now make up around 22% of global gross domestic product, matching the US share of global GDP, Lewis says.
JF Asset Management is overweight in China and Hong Kong, with the former referring to the H shares and red chips markets. It is also overweight, though to a lesser degree, in India and Indonesia.
Tam says corporate earnings prospects in India remain robust. She doesnÆt expect the current controversy over the proposed Securities and Exchange Board of India (SEBI) restrictions on participatory notes to have a long-term impact of the companies JF Asset Management invests in.
JF Asset Management is positive on Indonesia because of expectations of further interest rate cuts, which would free up more money for the stock market.
The bearishness on Taiwan is mainly due to JF Asset ManagementÆs distaste at the moment for technology shares, which are likely to bear the brunt of a US economic slowdown, Tam says.
Sector-wise, JF Asset Management is overweight in consumer plays, neutral in financials and underweight in technology, utilities, healthcare and exporters.
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