China’s biggest fund managers drum up support for stocks in the face of record selling by foreign investors

Name: China’s economy sees a resurgence in the third quarter, beating forecasts
Uploaded: 2023-11-02T08:30:16.000Z
Duration: 2 min 39 s
Description: China’s economy sees a resurgence in the third quarter, beating forecasts

Economic data points to an uptrend in growth, stock valuations are below the historical average and firms are paying generous dividends, E Fund’s Liu Xiaoyan says

China’s market regulator said on Wednesday it plans to deepen reforms to attract more long-term capital and boost the capital market

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China’s top fund managers are bullish on onshore stocks despite the benchmark CSI 300 Index ranking among the worst performers in the Asia-Pacific region. Photo: EPA-EFE

Zhang Shidongin Shanghai

Published: 4:30pm, 2 Nov 2023Updated: 4:45pm, 2 Nov 2023

China’s biggest asset-management firms are increasingly bullish in their assessment of onshore stocks given the economic recovery and appealing valuations, in another vote of confidence for the sluggish equity markets.

The economic data points to a continuing uptrend in growth, the stock valuations are below the historical average and companies are generous in dividend payouts because of regulatory pressure, building up optimism in stocks, Liu Xiaoyan, chairman and general manager of E Fund Management, wrote in an article for Xinhua on Tuesday. The content of the article was confirmed by the Guangzhou-based firm, which oversees 1.7 trillion yuan (US$232.3 billion) of assets and ranks as China’s top onshore money manager.

The sentiment was echoed by GF Fund Management and China Asset Management executives in interviews with Shanghai Securities News on Wednesday, who said China’s onshore stocks were attractive. The two firms are the second and third largest in the mutual fund industry, respectively, each with 1.3 trillion yuan of assets under management.

The calls by the biggest asset managers may provide support to China’s US$9.3 trillion stock market, which has been struggling to find a bottom after the benchmark CSI 300 Index fell to a four-year low last month. A raft of government measures to shore up stocks, including direct buying by the sovereign wealth fund and a cut in the stamp duty on stock transactions, has been offset by a record sell-off by foreign funds on worries about the strength of China’s economic recovery.

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China’s economy sees a resurgence in the third quarter, beating forecasts

“Stock price moves around values and low valuations are not going to last forever,” said E Fund’s Liu in the article. “From a long-term horizon, the best time for allocations is when the market is at its most pessimistic.”

E Fund, GF Fund and China Asset unveiled plans over the past week to each spend 200 million yuan to buy their own equity products in a show of confidence.