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Thursday, 25 September 2008
ASIA FUND POLL: Managers Steer Clear Of Asian Stocks
With global stock markets in turmoil, fund managers largely stayed away from Asian equities during the month of September but Hong Kong was an exception to the general aversion. PDF
ASIA FUND POLL: Managers Steer Clear Of Asian Stocks
By Ellen Sheng 25 September 2008
HONG KONG (Dow Jones)--With global stock markets in turmoil, fund managers largely stayed away from Asian equities during the month of September but Hong Kong was an exception to the general aversion.
Managers ranked Hong Kong at “overweight” during the month even as they soured on stocks globally, holding them at “underweight”. In the context of a global portfolio, they held Asian and Japanese stocks at neutral, according to Dow Jones’ monthly survey of fund managers. Weightings reflect managers’ portfolio composition compared to benchmark indexes.
Hong Kong’s stock market has fared relatively well in the eyes of fund managers throughout the year. As one of the regions’ more developed markets, Hong Kong appeals to fund managers that have pulled out of emerging markets in Asia. Hong Kong has additionally benefitted from its status as a gateway to China, where managers are still betting on long-term growth.
Hong Kong’s stock market has declined more than 30% year to date and is down more than 10% so far this month - suggesting that fund managers are banking on the longer-term picture in China.
It’s unclear how long fund managers will hang on in Hong Kong, however. Some hedge fund managers expressed concern that recent short-selling bans introduced in Australia, Taiwan and South Korea could pressure markets where shorting is still allowed. Hong Kong regulators have said they are keeping an eye on the situation but haven’t tightened regulations yet. Also, with the latest financial sector blowups in the U.S., fund managers expect more slowdown in Chinese exports.
During times of uncertainty, managers often react by pulling out of markets that are perceived as riskier such as emerging markets. That’s weighed heavily on Asian markets this year under the weight of the fallout from the U.S. subprime debt crisis which came to a head in September with the collapse of Lehman Brothers Holdings Inc. and the sale of Merrill Lynch & Co. to Bank of America.
Even though many economies have held up better than expected, Asian markets have been hit far more severely than the U.S. or those in Europe.
Another exception was Singapore, also a developed market, which managers had at “slight overweight.” Like Hong Kong, Singapore is sometimes seen as a gateway to other markets, particularly Southeast Asia.
Some managers viewed Singapore, however, with some concerns. New Star, for instance, said Singapore’s cyclicality makes it unattractive at present.
Overall, sentiment on the region’s stock markets has been far from rosy.
“We believe that whilst the structural case for emerging markets is still strong, significant cyclical risks remain,” JF Asset Management said.
According to fund flow tracker EPFR Global, Asia ex-Japan Funds recorded their second straight week of double digit losses for the week ended Sept. 17. Japanese stocks, which were viewed favourably in the context of a global portfolio in the last few months, also slipped in September. EPFR noted that Japanese equity funds posted outflows for the eighth consecutive week as consumer confidence fell to three-decade lows and companies cut back capital spending. Investors have also been waiting to see who emerges as the successor to Yasuo Fuduka, who resigned as the country’s prime minister at the beginning of September.
In the current climate, managers generally favoured cash or bonds over stocks.
Each month, Dow Jones Newswires surveys fund managers on portfolio weighting recommendations for the succeeding months, with most looking at a 12-month horizon. This latest survey was taken over the past week. The respondents for this month’s survey were Aberdeen Asset Management, Allianz Global Investors, Credit Agricole Asset Management, Henderson, JF Asset Management, Mirae Asset Global Investments Ltd., New Star International, Schroeder Investment Management and Standard Life Investments.
For the survey, each participant was asked to assign recommendations to each asset class. The weightings from each fund manager were then averaged: 0 is neutral, up to +0.5 is slightly overweight, above +0.5 to +1 is overweight, above +1 is very overweight. Meanwhile, 0 to -0.5 is slightly underweight, below -0.5 to -1 is underweight, below -1 is very underweight.
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ASIA FUND POLL: Managers Steer Clear Of Asian Stocks
By Ellen Sheng
25 September 2008
HONG KONG (Dow Jones)--With global stock markets in turmoil, fund managers largely stayed away from Asian equities during the month of September but Hong Kong was an exception to the general aversion.
Managers ranked Hong Kong at “overweight” during the month even as they soured on stocks globally, holding them at “underweight”. In the context of a global portfolio, they held Asian and Japanese stocks at neutral, according to Dow Jones’ monthly survey of fund managers. Weightings reflect managers’ portfolio composition compared to benchmark indexes.
Hong Kong’s stock market has fared relatively well in the eyes of fund managers throughout the year. As one of the regions’ more developed markets, Hong Kong appeals to fund managers that have pulled out of emerging markets in Asia. Hong Kong has additionally benefitted from its status as a gateway to China, where managers are still betting on long-term growth.
Hong Kong’s stock market has declined more than 30% year to date and is down more than 10% so far this month - suggesting that fund managers are banking on the longer-term picture in China.
It’s unclear how long fund managers will hang on in Hong Kong, however. Some hedge fund managers expressed concern that recent short-selling bans introduced in Australia, Taiwan and South Korea could pressure markets where shorting is still allowed. Hong Kong regulators have said they are keeping an eye on the situation but haven’t tightened regulations yet. Also, with the latest financial sector blowups in the U.S., fund managers expect more slowdown in Chinese exports.
During times of uncertainty, managers often react by pulling out of markets that are perceived as riskier such as emerging markets. That’s weighed heavily on Asian markets this year under the weight of the fallout from the U.S. subprime debt crisis which came to a head in September with the collapse of Lehman Brothers Holdings Inc. and the sale of Merrill Lynch & Co. to Bank of America.
Even though many economies have held up better than expected, Asian markets have been hit far more severely than the U.S. or those in Europe.
Another exception was Singapore, also a developed market, which managers had at “slight overweight.” Like Hong Kong, Singapore is sometimes seen as a gateway to other markets, particularly Southeast Asia.
Some managers viewed Singapore, however, with some concerns. New Star, for instance, said Singapore’s cyclicality makes it unattractive at present.
Overall, sentiment on the region’s stock markets has been far from rosy.
“We believe that whilst the structural case for emerging markets is still strong, significant cyclical risks remain,” JF Asset Management said.
According to fund flow tracker EPFR Global, Asia ex-Japan Funds recorded their second straight week of double digit losses for the week ended Sept. 17. Japanese stocks, which were viewed favourably in the context of a global portfolio in the last few months, also slipped in September. EPFR noted that Japanese equity funds posted outflows for the eighth consecutive week as consumer confidence fell to three-decade lows and companies cut back capital spending. Investors have also been waiting to see who emerges as the successor to Yasuo Fuduka, who resigned as the country’s prime minister at the beginning of September.
In the current climate, managers generally favoured cash or bonds over stocks.
Each month, Dow Jones Newswires surveys fund managers on portfolio weighting recommendations for the succeeding months, with most looking at a 12-month horizon. This latest survey was taken over the past week. The respondents for this month’s survey were Aberdeen Asset Management, Allianz Global Investors, Credit Agricole Asset Management, Henderson, JF Asset Management, Mirae Asset Global Investments Ltd., New Star International, Schroeder Investment Management and Standard Life Investments.
For the survey, each participant was asked to assign recommendations to each asset class. The weightings from each fund manager were then averaged: 0 is neutral, up to +0.5 is slightly overweight, above +0.5 to +1 is overweight, above +1 is very overweight. Meanwhile, 0 to -0.5 is slightly underweight, below -0.5 to -1 is underweight, below -1 is very underweight.
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