As all funds disclosed their 2017 mid-year report, the latest investment movements of the five widely-concerned national team funds were revealed.
As the A-share market gradually connects with the international market, fund managers began to increase the comparison of fiscal data and valuation and the comparative study of enterprises’ development path, core competitiveness and industry transformation across the world. In regard to the future market, national team fund managers will continue to keep a close eye on leading companies, especially focusing on investment opportunities in the manufacturing and consumption upgrading process.
Bullish on equity assets
As for the next half of this year, fund managers said that Chinese economy still shows strong strength and there is still structural opportunity in the market.
The China Asset Management New Economy Hybrid Fund believed that as the competition and the supply-side reform in domestic market improves industry concentration, industry leaders have seen their ROE increase gradually. It is expected that the stock market will see low downturn risks in the next half; instead there will be structural opportunities.
China Southern Fund Management Consumption Vitality Fund expected that the profits of equity assets are on a uptrend, given that real estate sales in third- and fourth-tier cities beat market expectations again, investment has stabilized due to the recovery in enterprises profits driven by the supply-side reform, consumption has bottomed out due to a recovery in resident income growth and exports have picked up due to economic recovery in major countries and regions across the world. It will ease uncertainties of liquidity conditions. All in all, the market will see limited risks, but structural opportunities.
For the mid and long run, China Southern Fund Management Consumption Vitality Fund said that it remains bullish on that the proportion of equity assets in all asset allocation will improve. The logic lies in that the overall valuation of the equity market has basically returned to a historical average level. Its cost performance is relatively higher than other asset categories. And enterprise profits are likely to expand further. Therefore, the allocation value of equity assets is highlighted.
Buy shares of quality leading enterprises
The change of China’s economic structure has brought more and more development opportunities for quality leading enterprises in various fields. National team funds also highlighted quality leading enterprises in investment.
For example, the fund manager of Harvest Fund Management New Opportunity Fund believed that China's economy shows a sign of endogenous growth with relatively stable economic data and obvious structural differentiation. Firstly, consumption has upgraded comprehensively. For example, brand consumption, sales of luxury car and high-end dairy products have grown rapidly. Secondly, the manufacturing industry has upgraded to high-end manufacturing. Ten years ago, China was the world’s first steel and cement manufacturer. But it is the world’s first semiconductor, security product, mobile phone manufacturer. Thirdly, as investment in traditional industries has continuously declined over the past three years, new capacity has declined dramatically. With stricter environmental supervision and the supply-side reform, industry leaders have seen a sharp increase in profit.
Bullish on investment opportunities in three aspects
Faced with opportunities in consumption and manufacturing upgrading, fund managers noted that fund should explore into all subsectors as well as the differences among enterprises.
Harvest Fund Management New Opportunity Fund believed that there are three categories of investment opportunities in the A-share market in the next half of this year. First are cement, electrolytic aluminum and other subsectors in traditional industries where the supply-side reform will beat expectations. Deleveraging in the financial sector can be also considered the supply-side reform in the industry. Leaders in these industries are expected to see better-than-expected profit. Second are leaders in the subsectors of consumption with better-than-expected fundamentals. Third are leaders in the subsectors of emerging growth industries whose valuation has fallen to reasonable Level and which are expected to grow, such as network security, automotive automation and health.
Translated by Coral Zhong
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