Big
market, big opportunities
China
has continued to lead the way in Asia, with country growth
likely to hit more than 8 per cent for 2003. Investment
from overseas is pouring into the country, and investment
funds are increasing their exposure to the region.
One
long-term subfund trying to take advantage of growth there
is the Fortis L Fund Equity Greater China. The Luxembourg-based
fund aims to outperform the benchmark index with a medium-risk
tolerance by investing in companies listed on the stock
markets in China, Hong Kong and Taiwan. Rigorous analysis
of the fundamentals of each country and short-term factors
determine the country allocation of the fund’s portfolio,
while stocks are picked by a regionally focused team.
In
2003 the fund posted a healthy return of 49.65 per cent
against the benchmark’s 48.96 per cent. Over three
years annualised, it has returned 2.88 per cent. The fund’s
volatility is registered at 23.69 per cent.
The
fund noticeably favours the Hong Kong market, with 42.3
per cent invested in companies listed there. Taiwan at 34.3
per and China at 22.4 per cent account for the following
highest country weightings.
However,
Wan Hoon Han, manager of the fund, says: “On country
selection we continue to favour China. We believe China
has entered into a new phase of growth, marked by a broadening
out of economic activities geographically and the shift
of focus from exports to domestic consumption. Hong Kong
will continue to be the direct beneficiary of the China
growth story.”
Han
adds that the fund is now taking a slightly more cautious
approach to Taiwan due to its dependence on IT spending.
The
manager has increased weightings in energy and basic materials
stocks in China which have outperformed recently. Banks
in Hong Kong have also witnessed increased exposure which
have benefited from renminbi deposit business and cyclical
economic recovery.
Han’s
aim in 2004 will be to focus on stocks producing domestic
goods over the region’s main exporters.
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