China funds make 47 per cent windfall from chip, new-energy stocks as tech clampdown burns home-grown giants

Top 10 onshore funds generated 41 to 51 per cent gains this year through August 6 by loading up on chip makers and new-energy companies

Fine Made Microelectronics, which almost doubled its earnings in 2020 and is among popular picks, rewarded funds with a 246 per cent rally

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China wants to reduce its dependence on imported chips and that is fuelling big gains in semiconductor producers. Photo: Handout

Published: 7:30am, 16 Aug 2021Updated: 7:53am, 16 Aug 2021

China’s top money managers are striking it rich with their bets on domestic semiconductor and new-energy stocks, offering their investors not only a windfall but also shelter from an unrelenting clampdown on internet-platform operators.

The top 10 onshore funds betting on the two policy-friendly sectors generated 41 to 51 per cent of returns this year through August 6, based on data compiled by Morningstar Direct. That is 47 per cent on average, or triple the gain in the ChiNext gauge of tech stocks in Shenzhen. The Hang Seng Tech Index in Hong Kong, a 30-member gauge with HK$1.84 trillion (US$236 billion) capitalisation, slumped 20.5 per cent.

Five of the funds loaded their portfolios with the A shares of new-energy and semiconductor companies, according to Morningstar, making them the envy of some investors who berated their managers for missing out or not buying enough of the winners.

“A lot of capital has been flowing to these two segments due to China’s determination to develop its own home-grown technologies,” said Belle Liang, head of investment advisory at Hang Seng Bank. “This is especially when other sectors, such as consumption, e-commerce and education, are not performing well.”

The performance underscores the focus among mainland money managers, soon after authorities began scrutinising tech companies for antitrust and pricing malpractices late last year. The crackdown intensified last month with the attack on Didi Global for data security, sending Chinese Big Tech into a US$1.2 trillion sell-off.