MAS names sustainability head; Malaysia’s EPF appoints COO and CFO; GIC PE head for SEA leaves; State Super hires new exec; Hesta appoints chief growth officer, chief Debby Blakey appointed to corporate governance board; ex-BlackRock exec joins IQ-EQ in Singapore; HSBC AM builds direct real estate team; ex-Vanguard head of distribution joins LGIM; Sanne names Singapore head; and more
Although the QFII funds turned in a stellar performance on-average, the consensus performance was still below gains achieved by a key benchmark index in China and local fund managers. The CSI 300 index, which tracks the performance of the 300 most active stocks in the yuan-denominated A-share markets in Shenzhen and Shanghai, posted a return of 161.55%. Equity funds managed by local fund management houses delivered a return of 137.66%.
LipperÆs head of China research in Shanghai, Zhou Liang, says sentiment towards QFII funds changed in the course of the past year. Up to the end of November, a total of $2.2 billion in investments exited these QFII funds, reflecting a worrying level of cautiousness among international investors towards the China A-share market after a banner year in 2007, he says.
However, Zhou notes itÆs the B-shares û a long-ignored class of mainland Chinese stocks denominated in G3 currencies û that have surprisingly taken over A-shares as the best performing market in the world in 2007. The B-shares market posted a gain of 181.23% in 2007, much higher than the A-shares marketÆs 137.66% rise.
Amid the stock mania in 2007, the country saw an explosion of assets inflow from retail investors. A total of 2.6 million of new mutual fund accounts were set up last year, while total assets managed by ChinaÆs 62 fund houses tripled, reaching Rmb3 trillion ($413 billion) by end-December.
However, the QFII fund universe is still rapidly expanding, especially in a period that follows the two rounds of strategic economic dialogue between China and United States, in which US Treasury Secretary Hank Paulson was said to have urged China to open up further for foreign investments. Indeed, the total QFII quota was raised to $30 billion from $10 billion by the State Administration of Foreign Exchange in late November.
Currently, there are 20 QFII funds investing $8.18 billion in China. Newcomers in 2007 include W.I.S.E CSI 300 Tracker Fund by BOCI-Prudential, PCA China Dragon A-share Fund, HSBC China Dragon Fund, Lyxor China A Fund, and Shenyin Wanguo-Aizawa China A-Share Fund.
Among these investments, the Morgan Stanley China A-share Fund managed by investment manager James Cheng in Singapore, has most consistently outperformed the others. It was the top performing fund last year, delivering a 174.38% return over the 12-month period. Another clear winner is FortisÆ FLEXIFUND Equity China A, which has gained 530.76% over the past three years.
Zhou believes ChinaÆs outlook is uncertain. For 2008, he advises fund investors to shift allocations from A-shares towards QDII-centric H-share investments in Hong Kong.
He is concerned by the fast rising inflation in China and the renminbi and their impact on the price advantage that ChinaÆs exporters have long enjoyed, which may gradually dissolve over the course of the year.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
Insto roundup: GPIF staff say J-Reits more attractive than traditional assets; Hong Kong's strict Spac criteria
EISS Super hit by another scandal; China's CSRC launches consultation on disclosure requirements for new BSE securities; Hong Kong issues consultation paper on Spacs; New World Development partners with China Taiping to focus on Greater Bay Area projects; GPIF employees say Japanese Reits have grown more attractive; Taiwan's BLF invites bid for $1.7 billion mandate; and more
SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.