ChinaAM’s peer-beating equity fund shows market struggles with ‘three cycles’ as policy twists eat into returns

Name: Ski-town residents complain of soaring prices sparked by Beijing Winter Olympics
Uploaded: 2022-01-28T00:30:21.000Z
Duration: 5 min 52 s
Description: Ski-town residents complain of soaring prices sparked by Beijing Winter Olympics

China Asset Management’s New Horizon China fund gained 35 per cent in 2021 but has lost 11 per cent so far in the new year

Fund manager Raymond Jing says investors need to read stock, industry and policy cycles to sidestep losses or outperform peers

3-MIN READ3-MIN

Getting the policy cycle right in China may hold key to beating the market this year, ChinaAMC says. Photo AFP

Cheryl Heng

Published: 8:30am, 28 Jan 2022

China’s policy twists have proven to be one of the biggest obstacles to money managers seeking to overcome a tempestuous year of investing in mainland stocks, even for a top performer like Raymond Jing at China Asset Management (HK).

His US$13 million New Horizon China A-share Fund gained 35 per cent last year, according to Bloomberg data, topping 98 per cent of his peers by timing the market for key sector bets. It has suffered an 11 per cent decline in the new year, even after recent policy-easing steps.

The swing highlights the difficulty among money managers in beating the market regularly as a myriad of issues undermines industry fundamentals and trading strategies in the US$13 trillion onshore market. The key, however, may be in getting the major three cycles right.

05:52

Ski-town residents complain of soaring prices sparked by Beijing Winter Olympics

“We research and invest in three cycles, not just the stock cycle but also the industry and the policy cycle,” said the Hong Kong-based fund manager, whose firm manages about US$8 billion of assets. “If you want to invest in China well, it’s crucial that you study the policy [cycle].”

While promising signs of policy-easing propelled stock gains in the last quarter, some analysts remained unconvinced policymakers are going far enough to alter their investment or market recommendations. The CSI 300 Index has lost 6.5 per cent this year, with Alibaba Group Holding sliding to an all-time low.

There have been no signs of a strong rebound in credit growth despite recent monetary easing, Montreal-based BCA Research said in a note on January 26. A muted improvement in credit expansion and deteriorating economic fundamentals will undermine equity performance in the near term, it added.