China Fund News reporter Wu Juanjuan
Due to the drag of this year's A-share equity market, the top overseas Chinese stock funds have performed poorly, and as of now, only one has achieved positive returns. However, some institutional investors have given optimistic expectations for the performance of A-shares next year.
Most overseas
10 billion Chinese stock funds lost
Data from Morningstar shows that as of the end of November, the C (cumulative) US dollar share of the Morgan Fund, a subsidiary of Morgan Asset Management, had a loss of 21.2% since 2022. According to data from LFF, the fund was the largest Chinese stock fund overseas by the end of October. As of December 2, the latest scale of the fund was approximately RMB 38.5 billion. Although
is still in deep losses, the fund's losses have narrowed after China's stock rebounded strongly in November. The above-mentioned C (cumulative) US dollar share lost 2.9% in 2021, with a net value of 65.8% in 2020, a 46.3% in 2019, and a 22.6% loss in 2018. Judging from the arithmetic mean, this share has still recorded positive returns over the past three years.
Let’s look at the second largest Chinese stock fund overseas. The PT US dollar share, owned by Allianz China A-share Fund, has fallen by 35.85% since 2022 as of December 2. Data from Morningstar shows that the latest scale of the fund is US$5.1 billion, equivalent to RMB 35.8 billion.
The Morgan Fund-China Fund A (Diployment) US dollar share, under Morgan Asset Management, has fallen by 28.98% since 2022. The latest fund size is about US$5.3 billion. As of the end of October, the fund size was smaller than Allianz China A-share Fund, making it the third largest Chinese stock fund overseas, but its latest scale has jumped to the second.
The Schroder International Selected Fund, a subsidiary of European giant Schroder Investments, is a Chinese A-share market. As of November 30, its net value fell 23%. The latest fund size is US$4.062 billion. According to data as of the end of October, the fund is the fourth largest Chinese stock fund overseas.
The macroeconomic recovery is expected
Recently, many global institutions released their outlook for 2023, and institutions have optimistic expectations for the performance of A-shares next year. Optimistic expectations for the stock market stem from the macro economy.
For example, at a media event held recently, Goldman Sachs chief Chinese economist Shanhui said that China's economic growth rate is forecast to be about 4.5% next year. Among the "three pillars" of the economy, consumption will become the main driving force for growth. Specifically, many places such as entertainment and transportation that are severely affected by the epidemic have a lot of room for recovery after opening up in the future.
Shanhui introduced that the potential for consumption-driven growth exists. Because residents' savings rate has risen a lot in the past two years. The growth rate of income has declined, and people have become more cautious in consumption. In this case, if the savings rate can slowly return to normal, there is a lot of room for consumption.
Shanhui predicts that investment in the infrastructure sector will slow down next year, and real estate investment may still be a factor that drags down economic growth, but the drag effect of real estate will gradually decrease in the next few years. In terms of exports, she believes that China's commodity exports will drop by 2% next year, and imports will increase. Comprehensive import and export, China's current account may decline compared with this year.
At a media event held last week, Hu Yifan, investment director and macroeconomic director of UBS Wealth Management, also gave relatively optimistic expectations for the Chinese economy. She expects China's GDP growth rate to rise to 5% next year. However, Hu Yifan believes that the market will gradually take these positive factors into consideration. At present, the view on the Chinese market remains relatively neutral, because considering that the market may fluctuate very violently in the next 3 to 6 months.
A shares may rebound significantly next year
Goldman Sachs chief Chinese stock strategist Liu Jinjin said that he would maintain the suggestions for high allocation of A shares and Hong Kong stocks. It is predicted that by the end of next year, the Shanghai and Shenzhen 300 will rise to 4,500 points, which has 16% upside potential compared with the current level. In the medium and long term, he maintains a positive view on the structural pros and believes that A-shares will outperform Hong Kong stocks.
Liu Jinjin said that the relaxation of the epidemic will benefit tourism, catering, entertainment, aviation and other sectors, and is a relatively optimistic topic for Goldman Sachs in the short term.
In the medium and long term, in the past few years, the Ministry of Industry and Information Technology has selected more than 9,000 "little giants" as the focus of national development, of which more than 700 are listed on the A-share market.Liu Jinlu introduced that among these more than 700 companies, targets with growth in profits, good corporate governance, and relatively active R&D investment are highly valued by overseas investors in medium and long term. In terms of
industry allocation, Liu Jinjin said that he is mainly optimistic about two lines next year. One is sectors that benefit from the relaxation trend of the epidemic. In the consumer industry, Goldman Sachs has adjusted consumer services, medical services, etc. from neutral to high-end.
In addition, Goldman Sachs maintains high-end distribution suggestions for online retail and consumer goods. Simply put, high-end industries are industries with relatively high consumption sensitivity. In addition, Goldman Sachs is more optimistic about real estate. Goldman Sachs has always been cautious about real estate, but after the policy was introduced, Goldman Sachs believes that the tail risks of real estate have been greatly reduced, so real estate stocks have been adjusted from the recommended low allocation to neutral.
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