Chinese equity funds continue to shine
Chinese equity funds will remain the most attractive funds with high returns this year as economists expect a V-shape recovery for the Chinese economy.
Chinese equity funds offered about 22% returns in 2020 and continue to grow 3-10% year-to-date.
Sanupong Suthadtumakul, a fund analyst at Phillip Securities, said China’s economy is growing and recovering quite well with the prospect of V-shape recovery supported by the country’s relatively more effective control of the Covid-19 outbreak and its policy on domestic consumption.
He expects consumer stocks to continue to grow over the next 3-6 months as they will benefit from the government policy, while technology-related stocks face more regulatory risk as the government begins to oversee and intervene more in this sector.
“Looking ahead, we think consumer stocks are attractive because their prices have not risen much from the past year and are less affected by regulatory risk, allowing investors to choose investment in well-diversified funds. Investors should focus on consumer groups as a strategy to invest in Chinese stocks this year,” Mr Sanupong said.
The top-performing Chinese equity fund in 2020 and year-to-date is the TMB China Opportunity Fund (TMBCOF), a feeder fund with investment in the Master Fund, namely the UBS (Lux) Equity Fund – China Opportunity (USD) Fund, which focuses on investing in new economy stocks such as ICT, healthcare, finance, consumer and services.
The most attractive Chinese companies include Tal Education Group, Alibaba Group, Tencent Holdings and Ping An Insurance Group.
Trinity Securities said 2021 will be another golden year for global equities. However, the fund will move from the US market which outperformed last year to Asian and emerging markets which are likely to outperform developed markets this year.
Nuttachart Mekmasin, an analyst at Trinity Securities, said emerging markets will benefit from the US’s increase in the tax rate. He expects to see an outflow from US tech stocks to value stock and cyclical stocks.
He said investors should monitor US inflation which is the key factor directing US monetary policy. If the government tapers money injection, global stocks would move sideways down.
He said the tapering would occur in the second half of this year.
Although prices of global stocks may be driven down by the tapering, returns from global investment will still likely outperform domestic stocks in terms of growth and dividend.
“Last year, the market dividend yield from local equities was just above 3%,” he said.
Mr Nuttachart suggests allocating 30% of the portfolio to stocks in emerging markets, 20% to stocks in developed markets, and up to 10% to the Thai stock market.
He recommends allocating 20% to fixed-income and bonds with the focus on domestic play as it has a higher
Last year, the market dividend yield from local equities was just above 3%. NUTTACHART MEKMASIN Analyst, Trinity Securities
upside, and another 10% to alternative assets including gold and cryptocurrencies, while the remaining 10% should be reserved in cash.
Passakorn Linmaneechote, head of research at Kasikorn Securities, recommends investmnent in the global finance and global consumer stocks which are expected to perform well in the second half of this year, led by the US and Chinese markets.
Mr Passakorn suggests investors allocate about 60% of their funds to equities with less than 20% to Thai shares, 30% to fixed-income, 10% to alternative assets, and 5-10% in cash.