Sanctioned Chinese companies, shunned by foreign funds, are top picks and winners at local funds
- ‘US-China sanctions are multiplying in both directions’ putting many companies at significant risk, research firm Alpine Macro says
- Domestic ‘patriotic buying’ will protect the downside a bit for these sanctioned names, Forsyth Barr Asia analyst says
China’s biggest semiconductor maker SMIC, oil explorer CNOOC, cybersecurity company 360 Security Technology, and cellular-network operator China Mobile – among the 10 largest sanctioned entities – rose by 15 per cent to 147 per cent in onshore markets last year.
Funds managed by E Fund Asset Management, ChinaAMC and other local peers profited from owning these shares last year, according to their latest reports to clients. In contrast, the broader CSI 500 Index of onshore stocks fell by 7.4 per cent last year, while the 82-member Hang Seng Index slipped 14 per cent.
“US-China sanctions are multiplying in both directions,” said Dan Alamariu, chief geopolitical strategist at Alpine Macro, a research firm based in Montreal. That would add to market uncertainty if they indeed intensify, with sectors including tech, health and biotech, advanced manufacturing and even finance all facing “significant risks.”