China’s hard landing has been postponed again. And fund managers at Ivy Investments have bought in; they are no longer underweight Chinese equity as of late February.
“The fund recently closed its longstanding underweight in China by adding to holdings in the financials, property and autos,” the investment team led by fund manager Jonas M. Krumplys said in a monthly Portfolio Perspectives piece.
They are also buying futures contracts based on the Hang Seng China Enterprises Index in Hong Kong.
Ivy is not alone. Catherine Yeung, investment director for equities at Fidelity International, said investors are coming back, including Hong Kong investors that are shifting towards A-shares.
“People last year were still very hesitant on China, but because of renewed enthusiasm…you’re seeing more flows into the market,” she says.
China’s latest PMI data shows that the first quarter will be strong, with gains of at least 6.5%, UBS estimates. PMI is a rearview indicator, but Ivy is taking a long term view here.
Ivy may appear contrarian to some.
They think some of the sector forecasts – like real estate – are “too gloomy”. They’re forecasting stronger cash flows and continued balance sheet repair in the metals and mining sector. Although Ivy did not mention this in their portfolio view, it is worth noting that China is cracking down on overcapacity in steel and shuttering hundreds of coal fired power plants, which should impact mining companies that are diversified into coal. Pure coal mining companies are likely to consolidate in the years ahead.
Many Chinese cities are also making it harder to buy a home, in an effort to curb housing prices. Home prices as percentage of median income is higher in Shanghai than it is in Manhattan.
Ivy recently launched three NextShares products.
NextShares are exchange traded funds investing in a pool of actively managed funds, providing a lower cost than a mutual fund.
One of their longest standing products is the Ivy International Core Equity (ICEIX 20,93 -0,12 -0,57%) mutual fund launched in 1997. Ivy Investments No Longer Underweight China
China’s hard landing has been postponed again. And fund managers at Ivy Investments have bought in; they are no longer underweight Chinese equity as of late February.
“The fund recently closed its longstanding underweight in China by adding to holdings in the financials, property and autos,” the investment team led by fund manager Jonas M. Krumplys said in a monthly Portfolio Perspectives piece.
They are also buying futures contracts based on the Hang Seng China Enterprises Index in Hong Kong.
Ivy is not alone. Catherine Yeung, investment director for equities at Fidelity International, said investors are coming back, including Hong Kong investors that are shifting towards A-shares.
“People last year were still very hesitant on China, but because of renewed enthusiasm…you’re seeing more flows into the market,” she says.
China’s latest PMI data shows that the first quarter will be strong, with gains of at least 6.5%, UBS estimates. PMI is a rearview indicator, but Ivy is taking a long term view here.
Ivy may appear contrarian to some.
They think some of the sector forecasts – like real estate – are “too gloomy”. They’re forecasting stronger cash flows and continued balance sheet repair in the metals and mining sector. Although Ivy did not mention this in their portfolio view, it is worth noting that China is cracking down on overcapacity in steel and shuttering hundreds of coal fired power plants, which should impact mining companies that are diversified into coal. Pure coal mining companies are likely to consolidate in the years ahead.
Many Chinese cities are also making it harder to buy a home, in an effort to curb housing prices. Home prices as percentage of median income is higher in Shanghai than it is in Manhattan.
Ivy recently launched three NextShares products.
NextShares are exchange traded funds investing in a pool of actively managed funds, providing a lower cost than a mutual fund.
One of their longest standing products is the Ivy International Core Equity (ICEIX 20,93 -0,12 -0,57%) mutual fund launched in 1997.