Despite macro events, China funds buoyant

Added 14th July 2016

The MSCI rejection of A-share inclusion, as well as Brexit, has had little impact on China-focused equity funds in the short-term, according to FE data.

Despite macro events, China funds buoyant

From June 1 to July 14, all 92 China equity funds (including exchange-traded products) available for sale in Hong Kong had positive returns, according to FE Analytics. 

The returns are in US dollar terms and range from 0.1%-9.5%.

The performance of China funds remained positive following the MSCI’s rejection of A-share inclusion on its key indices on June 15. The vote in the UK on June 24 to exit from the European Union initially sent funds down, but they quickly rebounded (chart below).

Excluding ETFs, the top five performers are the BOCHK All Weather CNY Equity Fund, the Templetion China Opportunities Fund, the Matthews Asia China Fund, the Value Partners China A Share Select Fund and the HS China B-Share Focus Fund, according to FE.  

Luke Ng, senior vice president of research at FE, told FSA that the rebound following the Brexit should not be overstated, as trading sentiment can still be easily influenced because the impact of Brexit is unknown.

“We are not sure of what’s going on. Will other members of the EU follow the UK’s move to withdraw? Is the EU going to collapse? Anything is going to affect trading sentiment. Investors should be careful,” Ng said.  

Also, Ng warns that there are longer-term concerns over China’s economic growth following Brexit.

“Industrial sectors, for example, may be affected, as they mainly focus on manufacturing and exports.”

However, technology and consumption sectors are likely to be less affected, as they mainly depend on the domestic demand, Ng said.


The top five-performing China equity funds saw a sharp rebound since the Brexit vote, outperforming the MSCI World, according to FE.



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