China’s star fund managers ask investors to keep the faith, saying Asia’s worst-performing bourse in the first quarter has bottomed out

Name: Shanghai imposes phased lockdowns as daily Covid infection numbers surge beyond 3,000
Uploaded: 2022-04-03T23:30:20.000Z
Duration: 2 min 51 s
Description: Shanghai imposes phased lockdowns as daily Covid infection numbers surge beyond 3,000

Zhang Kun and Liu Yanchun joined China International Capital Corp and Huaxi Securities in calling a bottom on Chinese stocks last month

The Shanghai Composite Index ended the first quarter 11 per cent lower, the worst in Asia

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An electronic board shows the Shanghai and Shenzhen stock indices in Shanghai’s Lujiazui financial district. The Shanghai Composite Index was Asia’s worst-performing benchmark in the first quarter. Photo: Reuters

Zhang Shidong

Published: 7:30am, 4 Apr 2022

China’s star fund managers expect the world’s second-largest stock market to resume its upward climb, brushing aside headwinds from the unprecedented Shanghai lockdown to the Ukraine-Russia war that made it Asia’s worst-performing benchmark in the first quarter.

Zhang Kun, who oversees US$16.1 billion of assets for E Fund Management, the most in China, has advised investors to focus on corporate fundamentals and metrics to value stocks rather than macroeconomic factors.

The fund manager increased holdings of Tencent Holdings and surveillance camera maker Hangzhou Hikvision Digital Technology in the fourth quarter, according to Bloomberg data.

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Shanghai imposes phased lockdowns as daily Covid infection numbers surge beyond 3,000

Liu Yanchun, who manages US$15.5 billion at Invesco Great Wall Fund Management, also struck an optimistic tone, arguing that a swing in the economic cycle was unlikely to affect stocks’ intrinsic value and that China’s policy support would soon lift sentiment across many industries.

The upbeat views by China’s elite money managers may be an indication that the worst for the nation’s US$11.3 trillion stock market is over, after it ended the first quarter as the worst performer in Asia. Amid a flare-up in coronavirus cases in China, the worst since the pandemic started two years ago, fears of rapid rate increases in the US to curb runaway inflation and the Russia-Ukraine war spurred sell-offs over the past three months, top officials from Beijing have pledged to shore up equities and economic growth.

Zhang and Liu joined China International Capital Corp and Huaxi Securities in calling a bottom on Chinese stocks last month. Their comments may help to restore confidence in the beleaguered stock market, given top fund managers’ influence on mom-and-pop traders who closely follow their calls and money actions.

“Expanding credit, stabilising growth and boosting domestic demand are expected to be the key policies this year, given China’s growth is already below its potential growth rate,” said Liu in one of his fund’s annual reports last week. “With the counter-cycle policies in place, the downward cycle is expected to end and be reversed. A short-term fluctuation in the economic cycle typically affects investors’ risk appetite rather than companies’ intrinsic values.”