LONDON, Nov. 4 (Reuters) – The multi-activate team of asset manager PineBridge Investments has sharply increased its exposure to Chinese equities and rival Man Group expects to expand its presence in the country with the expectation of strict COVID rules being eased.
Chinese markets roared higher and the yuan rose on Friday, adding about a trillion dollars to the value of Chinese stocks in a week, as rumors and news reports hope for a doubly easing of tension between the US and China and the severe COVID-19 pandemic. rules of China.
Hani Redha, global multi-asset portfolio manager at PineBridge, told Reuters on Friday that market moves, and indeed the fund’s plans, were motivated by hopes of a reopening that would boost the economy and Chinese assets.
“Europe is going into recession now, US maybe sometime next year, but China has already been in recession… The next leg is for Chinese equities, it’s a matter of when, and the main driver would be the reopening.” said Reda.
“As a result, we have increased our exposure to higher levels in anticipation of this future improvement.”
The asset manager has $133.4 billion in assets under management, of which $28.9 billion in global equities and $17.2 billion in the multi-asset strategy which is currently underweight European and US equities and overweight China.
The Chinese economy recovered faster than expected in the third quarter, although the rebound was challenged by COVID-19 restrictions, a protracted real estate crisis and global recession risks.
While there has been no official report of changes to China’s “dynamic-zero” COVID policy, a former Chinese disease control official told a conference hosted by investment bank Citi that substantial changes will soon take place.
Bloomberg News reported on Friday that China is working on easing the rules. However, a foreign ministry spokesman later said he was not aware of the report and called China’s COVID policy consistent and clear.
Nevertheless, the Hang Seng (.HSI) index bounced back from last week’s nearly 13-year low, while the Shanghai Composite (.SSEC) rose from a six-month low on Monday.
Redha said his team expected the restrictions to be lifted after the 14th National People’s Congress scheduled for March 2023.
ASSET MANAGERS IN CHINA
UK fund manager Man Group Plc (EMG.L), which has $138.4 billion in assets under management, plans to expand its presence in China — including betting on local stocks — once the barriers are eased, CEO Luke said. Ellis Thursday.
By contrast, many other foreign funds have attempted to leave China in recent months, mainly out of concerns that President Xi Jinping could extend COVID policy and private sector crackdowns during his third term in office.
Tiger Global Management is among those reassessing exposure to the country and halting investment in Chinese equities after Xi tightened his grip on power, the Wall Street Journal reported Thursday.
Net sales of Chinese equities by international active funds totaled about $30 billion last year, and global hedge fund allocations in Chinese equities have fallen from 15% at the 2020 peak to 8% today, Goldman Sachs estimates.
JPMorgan, meanwhile, estimates that over the course of nearly a decade of gradual capital account opening, foreign investors have increased their holdings of Chinese onshore stock to about $530 billion, or about 11% of the free float, though this has since fallen to $4 billion. 370 billion, taking into account price changes and outflows since the end of June.
Reporting by Joice Alves and Karin Strohecker; Editing by Kirsten Donovan
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