Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
ChinaÆs stock market was buoyed by a cut in the stamp tax, but that was mainly a temporary recovery and fundamental concerns remain. The mainland cut its stock-trading stamp tax to 0.1% from 0.3% in a bid to ease the pressure on the fragile stock market. Investors were highly motivated by the cut, and the Shanghai Composite Index closed up 9.3% last month.
ôGlobal markets still face challenging issues in the future,ö says Xav Feng, head of research for Taiwan and China at Lipper. ôInvestors also need to re-evaluate investment values after the recent euphoria.ö
Risks and concerns within China also persist. ChinaÆs gross domestic product grew 10.60% in the first quarter of 2008 from a year earlier. However, China's annual consumer price inflation rose to 8% in the first quarter from a year earlier and was 8.3% in March from a near-12-year high of 8.70% in February. Along with a global economic slowdown and high global commodity prices, there is a possibility of stagflation and China must prevent the spread of inflation, Feng says.
Target maturity funds outperformed, posting an average return of 3.11%, while guaranteed funds suffered the worst losses at 0.92% on-average. Mixed-asset balanced, mixed-asset aggressive, bond CNY, and money market CNY portfolios rose 2.20%, 1.11%, 0.65%, and 0.24% on average, respectively, while equity China and mixed-asset flexible, and mixed-asset conservative portfolios declined 0.52%, 0.38% and 0.28% on-average.
Qualified domestic institutional investor (QDII) funds, posted an average return of 5.67% last month, reversing their 9.58% average loss in March. The funds are down 12% year-to-date.
Qualified foreign institutional investors (QFII) posted an average return 3.00%, after declining 16.39% in March. The funds are down 21.89% year-to-date. The QFII funds with the highest amount of net sales in April were iShares FTSE/Xinhua A50 China Tracker and W.I.S.E.-CSI 300 China Tracker. The former's AUM increased 265% and the latterÆs gained 229%. The AUM of the 19 QFII funds tracked by Lipper last month rose to $8.39 billion.
China launched the QFII programme in mid-2003 to allow approved foreign institutions to trade A-shares and bonds on the Shanghai and Shenzhen exchanges. The programme was part of the governmentÆs efforts to open ChinaÆs capital market and ease controls on the capital account, under which the yuan isnÆt fully convertible.
Average performance of fund groups in China in April:
Equity China -0.52%
Mixed Asset CNY Aggressive +1.11%
Mixed Asset CNY Flexible -0.28%
Mixed Asset CNY Balanced +2.20%
Mixed Asset Other Conservative -0.38%
Bond CNY +0.65%
Money Market CNY +0.24%
Target Maturity +3.11%
Top performing QFII funds in April:
iShares FTSE/Xinhua A50 China Tracker +8.81%
Hang Seng China A-Share Focus +8.66%
Morgan Stanley China A Share Fund +8.02%
Hang Seng China A-Share Focus A1 +6.64%
JF China Pioneer A-Share +4.93%
ABN AMRO China A Share Fund +4.83%
W.I.S.E. - CSI 300 China Tracker +3.37%
APS China A Share +1.92%
ING China A Share Fund P Class +1.22%
PCA China Dragon A Share Equity A-1 Class C -2.17%
Nikko China A Share Fund 2 -5.06%
Nikko AM China A Stock Fund -5.12%
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