China stocks favoured by UBS, Goldman can wait as US$3.9 trillion mutual fund industry struggles to attract new investors
- Sales of mutual fund products amounted to 21 billion yuan in the first two weeks, on course for slowest January since at least 2018
- The limp mirrors the market slide, poor returns from star fund managers and lingering regulatory risks
The mutual fund industry raked in 21 billion yuan (US$3.3 billion) of sales in stock-focused products in the first two weeks of 2022, according to data compiled by the Post. At this pace, sales in January would represent the slowest start to a year since at least 2018. About 450 billion yuan of newly launched funds were sold in January last year, a record.
The limp mirrors a lack of conviction in the market as key stock barometers in Shanghai and Shenzhen slumped as popular bets like electric-car battery maker Contemporary Amperex crashed. Losses incurred by star fund managers unnerved investors while new Covid-19 lockdowns weighed on the nation’s economic outlook.
“Given the market performance, mutual funds are expected to face more pressure in sales this year,” said Xue Jun, an analyst at Orient Securities in Shanghai. Thus, bad-performing stocks that make up the funds’ biggest holdings may become a burden in their sales pitches, he added.
Goldman strategists favoured yuan-denominated stocks for their 13 per cent upside in 2022, counting on policy easing, political transition and moderating regulatory risks. UBS has an overweight call on the market. BlackRock turned tactically positive last quarter, while T. Rowe Price said the market is under-owned by investors.
