Mizuho to open China fund despite Japanese dispute
Mizuho Asset Management, a unit of Japan's third-biggest lender, is opening a China fund, betting that new leaders in the world's No 2 economy will boost growth and quell a territorial dispute that's prompted other banks to cancel planned funds.
The MHAM China Growth Focus Fund, which starts on November 30, will focus on industries that may benefit from railway, health care and financial reforms, said Masahiko Ejiri, the fund's manager.
Possible target stocks include Citic Securities, Sinopharm and other pharmaceutical firms. Consumer and internet companies including Tencent and US-listed Baidu are also candidates, Ejiri added.
The Communist Party started its 18th congress in Beijing yesterday to choose new leaders, a decision that will shape the nation's economic and financial policies for the next decade.
Mizuho is bucking a trend that has seen Japanese companies such as United Investments, Sumitomo Mitsui Asset Management and SBI Asset Management cancel China funds as a dispute over an island chain soured relations between the nations.
"Fund performance isn't really impacted by the tension between Japan and China," Ejiri said. "Our concern is whether we can raise money because of Japanese investor sentiment towards China. When demand for A-share funds returns, there won't be many competitors providing the opportunity to investors."
China's Communist Party delegates are meeting over several days to choose a fifth generation of leaders. Vice-President Xi Jinping is expected to replace Hu Jintao as general secretary of the 82 million-member party. Vice-Premier Li Keqiang is expected to take Premier Wen Jiabao's spot on the top Politburo Standing Committee, setting him up to assume Wen's job next March.
China's new leaders are poised to inherit the weakest economic expansion since 1999, with growth of 7.7 per cent this year, according to the median estimate of 45 analysts in a survey.
Mizuho's fund will include Chinese companies listed on the mainland, Hong Kong and other venues, as well as exchange-traded funds denominated in yuan and Hong Kong dollars, Ejiri said.
Mizuho Asset oversees about US$45 billion, including Hong Kong-listed equities. Airlines and gold-related firms may also be added as a short-term strategy betting on global liquidity, Ejiri said.
Hong Kong's market has rallied recently as money poured into the city following so-called quantitative easing by global central banks including the US, Europe and Japan.