New | China slowdown and Paris attacks spur safe play by fund investors

China economic slowdown, the likely US interest rate rise next month and the threat of attacks after terrorists struck Paris has prompted investors to shift from equity funds to bond funds or other safer investment options, according to fund managers.

Bruno Lee Kam-wing, Asia head of wealth and asset management of Manulife, said the terrorist attacks in Paris this month would not discourage fund managers to veer away from euro or European stock markets immediately but the longer term impact on the economy may affect the fund industry next year.

“The terrorist attacks may cause France and other European countries to review their refugee policies to prevent terrorists pretending to be refugees from entering their countries. This may force some refugees to remain in Greece, Italy or Turkey,” he said.

“This would hurt the economic outlook of these countries with many refugees. In addition, the threat may affect tourism and consumption and lead to a slow down in the economic recovery pace in Europe.”

Islamist militants killed 132 people in Paris and injured hundreds, as Paris declared a state of emergency and territories such as Hong Kong warned people from travelling to the French capital unless necessary.

Lee said other critical factors punters would need to carefully consider in the investment outlook are the latest five year plan of China which set economic growth at 6.5 per cent for the next five years, down from 8 per cent in the previous five years, and the rising chance the US Fed would raise interest rates next month for the first time in a decade.