Asia’s best-performing equity funds of last year have tumbled to near the bottom of the pile as their bets on China’s green energy rally turn sour.
Driving the underperformance are the funds’ holdings in China’s renewable energy and electric vehicles, whose shares have taken a beating after two years of scorching rallies following Beijing’s carbon neutrality goals.
Even as China reaffirms its policy easing stance, monetary tightening elsewhere has pushed up global borrowing costs, spurring a rush out of frothy shares.
The five stock mutual funds that handed investors at least 30 percent in total returns last year have all posted losses of about 6 percent or more since the start of this year, data compiled by Bloomberg showed.
Last year’s star, First State Cinda New Energy Industry Equity Fund, has lost 11 percent, versus an average loss of 4.7 percent among the region’s US$1 billion-plus peers.
Asia’s equity markets have had a choppy start to the year as the prospect of rapid rate hikes by the US Federal Reserve, combined with China’s uncertain growth outlook, weighs on sentiment. Against this backdrop, the weakness in some widely held Chinese names, such as battery giant Contemporary Amperex Technology Co (CATL, 新能源科技), has been unnerving.
CATL, a recurring name among top funds’ holdings last year, has lost more than US$57 billion in market value since a December peak and is down 10 percent this year even with last week’s gains.
Among electric-vehicle supplier peers, Eve Energy Co’s (億緯鋰能) stock price is down 28 percent this year, while Tianqi Lithium Corp (天齊鋰業) has shed almost 11 percent. Last year, they gained 45 percent and 172 percent respectively.
All five asset managers declined to comment on their performance.
Meanwhile, equity funds doing well this year are those focused on the cyclicals-heavy Japanese market, in line with a rotation out of expensive names into value stocks. The MAN GLG Japan CoreAlpha Equity fund and the Arcus Japan Fund had total returns of more than 8 percent.
Over the longer term, China’s push to have “net zero” carbon emissions by 2060 in what is already the world’s largest renewables market means that the industry has significant room to grow.
However, last year’s severe energy shortage in China underscores the delicate balance that policymakers face between achieving green ambitions and preventing hiccups along the way.
“We’ll need to see more stabilizing signs before investors could turn a bit more bullish on the growth sector, so it will take time,” Indosuez Wealth Management senior equity adviser Winnie Chiu said.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure
RSS