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Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailChina's monetary policy settings have been optimal so far: Fullerton Fund ManagementRobert St Clair of Fullerton Fund Management says that the PBOC is using "all the tools it has at its disposal" and the monetary stimulus could make a difference as it is targeting the heart of the problem facing China.
Persons: Fullerton Fund Management Robert St Clair Organizations: Fullerton Fund Management Locations: China
Australia's S&P/ASX 200 index (.AXJO) rose 0.66%, while Japan's Nikkei (.N225) continued its ascent, rising to its highest since August 1990, during the country's so-called bubble era. Futures indicated European stocks were set to open higher, with Eurostoxx 50 futures up 0.44%, German DAX futures up 0.41% and FTSE futures up 0.23%. China's blue-chip CSI300 Index (.CSI300) rose 0.20%, while the Shanghai Composite Index (.SSEC) was up 0.13%, having reversed from earlier losses. Hawkish rhetoric from Fed speakers continued with Dallas Fed President Lorie Logan and St. Louis Fed President James Bullard saying inflation was not cooling fast enough to allow the Fed to pause its interest-rate hike campaign. Against a basket of currencies, the dollar rose 0.029% and was wedged near a two-month high.
It is unlikely to be resolved quickly even if the markets keep rallying and China economy keeps global growth ticking. Data paints a murky picture, but supports brokers' analysis that the bid from long-only money managers is absent. Allocation analysis from data firm EPFR shows a broad downtrend, especially to U.S.-domiciled China funds. EPFR figures show allocation to China funds outside the U.S. has increased for two years and mainland markets' recent performance has also been encouraging. "Our reservations about China's long-term investment prospects are based on our outlook for returns to capital."
Francois Savary, chief investment officer at Prime Partners SA, a Swiss wealth manager with around $4.1 billion of assets, says it is difficult for investors to avoid China exposure. Indus Capital Partners, a New York-based investment manager, started to reduce exposure in China in pan-Asian funds in 2021, but has since returned. Greater China exposure in its $1.37 billion long-only fund, Indus Select, has increased modestly. Some fund managers think Xi wants to quickly get back to the business of supporting the economy. "Investors are just in this 'wait and see' mode to get more clarity that stronger growth can be achieved," said St Clair.
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