Monday, September 13, 2010

Funds bullish on Asia equities, cautious on China - HSBC

HONG KONG: Fund managers grew more bullish about Asian equities in the third quarter even though they were more cautious on Japan and China, suggesting the September rally has legs, an HSBC survey showed on Monday, Sept 13.

Investor optimism also spread to Asian bonds, where the share of overweight positions tripled from the prior quarter.

"Irrespective of strong inflows to bond funds, our research illustrates that fund managers are selectively bullish on equities, especially in fast-growing regions including Asia-Pacific which have managed to sustain economic recovery and stimulate economic activity globally," Bruno Lee, HSBC's regional head of wealth management, Asia Pacific, said in a release.

The percentage of overweight positions in Asia-Pacific ex-Japan stocks rose to 44 percent in the third quarter from 38 percent in the second quarter and no one was overweight, the survey of 12 asset managers showed.

However, overweight positions in Greater China equities shrank to 50 percent in the third quarter from 71 percent. Also, no fund manager was overweight Japanese equities, down from 25 percent in the second quarter.

After dropping 9.7 percent in the second quarter, the MSCI Asia-Pacific ex-Japan stocks index <.MIAPJ0000PUS> is up 12.5 percent so far in the third quarter, on track for the largest quarterly return since the third quarter of 2009.

In fixed income, investors increased their overweight positions on Asian bonds to 57 percent from 17 percent but lifted their neutral positions in every other category, including U.S. dollar and European debt, because of valuation concerns.

Funds surveyed account for 14.8 percent of global funds under management. They are: AllianceBernstein, Allianz Global Investors, Baring Asset Management, BlackRock, Fidelity Investment Management, Franklin Templeton Investments, HSBC Global Asset Management, Investec Asset Management, JPMorgan Asset Management, Prudential Asset Management, Schroders Investment Management and Societe Generale. - Reuters

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