Tuesday, September 14, 2010

Funds bullish on Asian equities

HONG KONG: Fund managers grew more bullish about Asian equities in the third quarter even though they were more cautious on Japan and China, suggesting the September rally has legs, an HSBC survey showed yesterday.

Investor optimism also spread to Asian bonds, where the share of overweight positions tripled from the prior quarter.

"Irrespective of strong inflows to bond funds, our research illustrates that fund managers are selectively bullish on equities, especially in fast-growing regions including Asia-Pacific which have managed to sustain economic recovery and stimulate economic activity globally," Bruno Lee, HSBC's regional head of wealth management, Asia-Pacific, said in a release.

The percentage of overweight positions in Asia-Pacific ex-Japan stocks rose to 44 per cent in the third quarter from 38 per cent in the second quarter and no one was overweight, the survey of 12 asset managers showed.

However, overweight positions in Greater China equities shrank to 50 per cent in the third quarter from 71 per cent. Also, no fund manager was overweight Japanese equities, down from 25 per cent in the second quarter.

After dropping 9.7 per cent in the second quarter, the MSCI Asia-Pacific ex-Japan stocks index is up 12.5 per cent so far in the third quarter, on track for the largest quarterly return since the third quarter of 2009.

In fixed income, investors increased their overweight positions on Asian bonds to 57 per cent from 17 per cent but lifted their neutral positions in every other category, including US dollar and European debt, because of valuation concerns.

Funds surveyed account for 14.8 per cent of global funds under management. - Reuters

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