News Brief: Chinese fund firms unprepared for market rally – Investors consider Trump-proofing portfolios – HK ETF trading hits new high
Fund firms in China have been caught off guard by the dramatic market rally and sudden turnaround in investor sentiment. The surprise stimulus package at the end of last month was followed by China's Golden Week holidays which paused fund sales and gave firms little opportunity to take advantage of rising demand.
"The market resurgence happened too fast, we didn't have time to react to it," one Shanghai-based marketing executive at a Sino-foreign fund joint venture told Ignites Asia this week. Given the current volatility, the executive also feared new investors might end up "stuck" in a fund product if there is a major correction. Read about reactions to China's market rebound here.
As the US presidential election draws close, fund firms in Asia are fielding more questions from investors about how to rejig or protect portfolios. Some investors are taking defensive positions ahead of a possible Donald Trump victory or a disputed outcome that could lead to a prolonged period of "heightened uncertainty".
Fund firms have also discussed new investment opportunities with clients amid potential market volatility. Janus Henderson has highlighted US and European small-caps and European listed-real estate funds, while Abrdn has seen interest in multi-asset strategies. Read about investor concerns ahead of the US election here.
Trading in Hong Kong-listed ETFs hit a record high as global investors sought a "proxy" for mainland exchanges that were shut for five days. ETFs, including and leveraged and inverse products, hit a single-day turnover record of HK$76bn (US$9.78bn) on September 27.
The Tracker Fund of Hong Kong and the Hang Seng China Enterprises Index ETF were among the most traded ETFs, but experts warned of "crazy premiums" on share prices, with some smaller ETFs seeing their unit price surge to "more than five times" net asset values. Read more about the record ETF trading here.
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Graph of the week
China's stimulus support and stock market rebound have driven ETF assets soaring above the Rmb3tn (US$427.4bn) mark, with the market now dominated by a quartet of huge CSI 300 ETFs. The largest, the Huatai Pinebridge CSI 300 ETF, saw its assets reach Rmb430bn earlier this week. Read more about China's booming ETF assets here.
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