China Asset Management Co (China AMC, 華夏基金管理公司), China’s biggest mutual fund company, boosted its holdings in property stocks in its flagship fund in the fourth quarter even as Beijing tightened policies to curb asset bubbles.
Wang Yawei (王亞偉) increased the proportion of real-estate shares in his China AMC Large-Cap Select Fund to 19 percent from 13 percent, while cutting holdings of banks and insurers to 20 percent from 24 percent.
China AMC had 7.7 billion yuan in assets (US$1.2 billion) as of Dec. 31, a quarterly report posted on its Web site showed. The fund has beaten 97 percent of rivals during the past five years, according to data -compiled by Bloomberg.
A gauge of property stocks in the Shanghai Composite Index jumped 3.8 percent yesterday, the most among the five groups and the biggest gain since Jan. 4. The benchmark measure climbed 1.4 percent.
Goldman Sachs Group Inc also boosted its stock rating for Chinese real-estate shares to “overweight” yesterday, citing the prospect of “more decisive policy action” in the near term.
“China’s stock market will continue to fluctuate,” Wang said in the report. “Investment opportunities may depend on China’s inflation levels.”
Chinese property stocks are rebounding this year on speculation rising demand for real estate might bolster prices, which climbed for a 19th month last month. The gauge of developers has jumped 3.4 percent this year, compared with a 3.3 percent slump for the broader index. Wang increased his equities allocation to 89.3 percent as of Dec. 31, compared with 87.8 percent in the previous quarter, the report showed.
The property gauge plunged 28 percent last year, the most among the five industry groups, as Chinese Premier Wen Jiabao’s (溫家寶) government ordered banks to set aside more reserves six times and boosted interest rates twice to tame inflation and curb asset bubbles after record gains in lending and property prices.
Jim Chanos, the hedge fund manager who was one of the first investors to foresee the 2001 -collapse of Enron Corp, said in a Bloomberg Television interview last month that China’s property boom continues “unabated” and has even picked up since the government enacted policies to cool speculation.
Chinese property stocks were raised to “overweight” from “neutral” at Goldman Sachs, which said earnings risks to developers and banks are “limited,” according to a report by analysts, including Helen Zhu.
China Vanke Co (萬科集團), China’s largest developer, increased 3 percent to 8.38 yuan yesterday. Yunnan Metropolitan Real Estate Development Co added 0.5 percent to 18.63 yuan, the first gain in a week. The company was Wang’s 10th biggest holding, according to the quarterly report.
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