Some Chinese equity funds are raking it in and defying the odds of the deteriorating US-China trade war
- Yihai International’s shares have surged nearly 900 per cent over the past two years
- MegaTrust Investment’s US$600 million China-focused funds returned investors 22 per cent this year
As the Sino-US trade war roiled stock markets over the past year, China-focused fund manager Michelle Leung sat unfazed on her holdings of hotpot condiment maker Yihai International.
It was a good call. And not simply because people need to eat whether in good times or bad times.
Yihai, whose shares have surged nearly 900 per cent over the past two years, are among a handful of high-conviction stocks that helped Leung’s long-only China equity fund shine.
In 2018, when the broadening trade war knocked the MSCI China Index down roughly 20 per cent, Leung’s US$200 million Xingtai China fund achieved an enviable positive return of 4.9 per cent. During the Jan-April period this year, her fund delivered a return of 30.1 per cent, according to the fund’s latest disclosure.
“The trade war is a big issue today,” said Leung, Hong Kong-based CEO of Xingtai Capital, noting the timing of any resolution to the dispute remains uncertain. “No one has information edge on that. But we do have an information edge on the companies we invested in.”
That Leung and a bunch of fundamentals-based, bottom-up investors are thriving in China is evidence that the world’s second-biggest economy still offers plenty of opportunities for stock pickers, despite the risks of a protracted stand-off with the United States.