JPMorgan Asset Management rotates China exposure amid volatility and trade tensions, eyes health care
Re-rating has hit the returns that can be expected from IT and tech stocks, including Alibaba and Tencent, says chief investment officer for emerging markets in Asia-Pacific
JPMorgan Asset Management is reducing its exposure to Chinese information technology and technology sector equities, as well as to consumer-oriented companies, Richard Titherington, the chief investment officer for emerging markets in Asia-Pacific, said on Tuesday in Hong Kong.
The company is shifting towards health care because of increasing market volatility on the back of US-China trade tensions.
Also, stocks that include Alibaba Group Holding and Tencent Holdings have fallen to fair value levels because of significant re-rating. Their expected returns have declined to 10 per cent from 25 per cent a year ago, said Titherington.
Asian equities have resulted in positive returns in 20 of the past 31 years. However, there were periods in these years when the markets fell by close to 20 per cent. This means last year’s benign stock environment was abnormal.
“We have brought down the risk in our portfolios in order to recognise that volatility was going up,”
said Titherington. “Clearly, the trade issue is a wild card. I am sure in 2018 you will have a bigger sell off in markets.”