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Bull run in China stocks to continue in Year of the Ox, top Hong Kong MPF managers say
- Funds investing in China, Taiwan and Hong Kong were last year’s best performers, earning more than 31 per cent
- The 401 investment funds under the compulsory retirement scheme, on average, grew 12.2 per cent last year
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Investors in Hong Kong’s Mandatory Provident Fund (MPF) can continue to bet on Chinese stocks in the Year of the Ox despite some short-term volatility, top performing fund managers said.
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The 401 investment funds of the compulsory retirement scheme cover about 4.5 million current and former employees in the city. On average, these funds grew 12.2 per cent last year and 12.65 per cent in 2019, according to data provider Refinitiv Lipper. The total asset value of the MPF rose to HK$1.1 trillion (US$140 billion) as of the end of last year, data released by Mandatory Provident Fund Schemes Authority on Monday shows.
“In the short term, we would not be surprised to see a period of consolidation in markets. In China in particular, as economic momentum accelerates it is likely we will see some modest tightening of monetary policy,” said Raymond Chan, chief investment officer of equity Asia-Pacific and portfolio manager at Allianz Global Investors.
Chinese stocks will continue to be a safe bet in the new year, which starts on Friday, because the country’s economy has recovered from the economic dislocation caused by the coronavirus pandemic quicker than the rest of the world, fund managers said. China posted 2.3 per cent growth in gross domestic product in 2020 despite a steep slump in the first quarter due to the pandemic, becoming the only major economy to avoid a contraction last year.
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“We remain optimistic about the longer term outlook. We expect to see a global economic recovery in the second half of the year, and this should lead to an improving growth outlook,” Chan added. AllianzGI had three MPF funds among the top 10 performers of 2020, according Refinitiv data. These invest in Asia-Pacific stocks, stocks in China, Taiwan and Hong Kong, and bond and stocks in Asia.
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