SHANGHAI: Mutual funds in China have lifted their recommended allocation to equities to a five-month high, betting on supportive macroeconomic policy, but continued to decrease the proportion of shares in banks and brokerages, the latest monthly Reuters poll of fund managers shows.
The funds' suggested equity weightings over the next three months edged up to 81.3 percent on average from last month's 80.0 percent, according to the poll of nine China-based funds taken from Aug. 27-30.
Despite the uptick in equity allocations, most of the fund managers polled remained somewhat cautious towards the outlook for Chinese stocks.
"We still need to wait and see. It is hard to judge right now about China's coming economic policy," said one of the fund managers who participated in the poll.
"The risk of inflation is also increasing. In particular, property prices could start rising again and prices of agricultural goods will go up."
China's mutual funds lost a combined 440 billion yuan ($65 billion) in the first half of the year, the second-biggest loss in history, due mainly to the weak stock market, state media said on Monday.
However, some fund managers were quite optimistic, saying it was possible Beijing could announce a new round of stimulus plans in the fourth quarter on concerns about an economic slowdown, while the U.S. Federal Reserve has also said it could take further steps to spur the economy if needed.
"All these things will encourage investors to increase their exposure to risky assets, including equities," one of the fund managers polled said.
Within an equities portfolio, the consumer sector held on to first place for the fifth month in a row on signs of inflationary risks, with its weighting rising to 29.8 percent from last month's 26 percent.
Suggested weightings for the financial and real estate sectors -- which have borne the brunt of the government's efforts to curb lending and property speculation -- were cut again.
The weighting for financial stocks fell to 13.7 percent versus last month's 16.1 percent, and that for the real estate sector decreased to 8.7 percent from last month's 9.4 percent.
Recommended weightings for bonds over the next three months remained at 8.1 percent, while suggested cash holdings edged down to 10.6 percent from 11.9 percent in the previous poll.
Fund managers expected the benchmark Shanghai Composite Index to trade between 2,500 and 3,000 points in the next three months, compared with the previous poll's range of 2,300 to 3,000 points.
On Tuesday, the stock index was trading down 0.7 percent by 0545 GMT at 2,634 points. The index traded between 2,560 and 2,700 points during August.
The nine funds on average expected the yield on the one-year central bank bill in the secondary market to stand at 2.0714 percent three months from now, compared with 2.1270 percent bid on Tuesday, according to Reuters Reference Rates.
The funds' suggested equity weightings over the next three months edged up to 81.3 percent on average from last month's 80.0 percent, according to the poll of nine China-based funds taken from Aug. 27-30.
Despite the uptick in equity allocations, most of the fund managers polled remained somewhat cautious towards the outlook for Chinese stocks.
"We still need to wait and see. It is hard to judge right now about China's coming economic policy," said one of the fund managers who participated in the poll.
"The risk of inflation is also increasing. In particular, property prices could start rising again and prices of agricultural goods will go up."
China's mutual funds lost a combined 440 billion yuan ($65 billion) in the first half of the year, the second-biggest loss in history, due mainly to the weak stock market, state media said on Monday.
However, some fund managers were quite optimistic, saying it was possible Beijing could announce a new round of stimulus plans in the fourth quarter on concerns about an economic slowdown, while the U.S. Federal Reserve has also said it could take further steps to spur the economy if needed.
"All these things will encourage investors to increase their exposure to risky assets, including equities," one of the fund managers polled said.
Within an equities portfolio, the consumer sector held on to first place for the fifth month in a row on signs of inflationary risks, with its weighting rising to 29.8 percent from last month's 26 percent.
Suggested weightings for the financial and real estate sectors -- which have borne the brunt of the government's efforts to curb lending and property speculation -- were cut again.
The weighting for financial stocks fell to 13.7 percent versus last month's 16.1 percent, and that for the real estate sector decreased to 8.7 percent from last month's 9.4 percent.
Recommended weightings for bonds over the next three months remained at 8.1 percent, while suggested cash holdings edged down to 10.6 percent from 11.9 percent in the previous poll.
Fund managers expected the benchmark Shanghai Composite Index to trade between 2,500 and 3,000 points in the next three months, compared with the previous poll's range of 2,300 to 3,000 points.
On Tuesday, the stock index was trading down 0.7 percent by 0545 GMT at 2,634 points. The index traded between 2,560 and 2,700 points during August.
The nine funds on average expected the yield on the one-year central bank bill in the secondary market to stand at 2.0714 percent three months from now, compared with 2.1270 percent bid on Tuesday, according to Reuters Reference Rates.
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