Across The BorderBuying China’s rust belt industries helped this one top fund manager beat out 98 pc of rivals
Fund manager Qiu Dongrong bought out of favour industries burdened with excess industrial capacity-- now they’re helping underpin a 35 pc return in the past year
Earnings growth doesn’t matter all than much when its comes to picking stocks for fund manger Qiu Dongrong, who believes low share prices are a better guide to building a portfolio.
The money manager’s approach of buying cheap Chinese stocks with little growth potential has paid off over the past year. In fact, bets on out of favour stocks such as China Petroleum & Chemical and Daqin Railway have enabled his fund to beat out 98 per cent of rivals, according to Shanghai-based fund tracker Howbuy.
“These traditional industries may not have good growth, or even no growth,” said Qiu, a fund manager at HSBC Jintrust Fund Management. “However, some companies are severely undervalued against fundamentals and the stock prices have already reflected the worst scenario. We’re particularly watching these companies.”
His 4.8 billion yuan (US$706.17 million) HSBC Jintrust Large Cap Equity Fund has returned 35 per cent over the past 12 months, compared with an 11 per cent gain on the benchmark Shanghai Composite Index during the period.
Qiu’s strategy of snapping up out of favour equities turned out to a winner thanks to a liquidity squeeze that put the shine back on larger companies with stable earnings.