Bangkok--3 Jul--HSBC
Three in four or 75 per cent of fund managers polled in HSBC’s quarterly Fund Managers Survey are holding a positive view towards Greater China equities in the second quarter of 2009, up from 67 per cent or two-thirds in 1Q09.
Overall, fund managers in the survey were less optimistic about equities as an investment class with fund managers going underweight rising from 22 per cent in the first quarter of the year to 40 per cent this quarter. The sectors seeing some of the biggest shifts in sentiment included European and Japanese equities. For European equities, 36 per cent of respondents took an underweight view (versus 22% in 1Q09). Fund managers also went negative towards Japanese equities with 70 per cent taking an underweight view (vs 33% in 1Q09). Details of the HSBC survey of fund manager sentiment are attached.
Views towards bonds remained bullish in 2Q09 as 7 in 10 fund managers held an overweight view compared to 57 per cent of the respondents in 1Q09. More fund managers held overweight views towards all bond sectors — 56 per cent for European bonds (vs 50%); 44 per cent for US dollar bonds (vs 29%), 44 per cent for Global Emerging Markets/High Yield bonds (vs 33%) and 38 per cent for Asian bonds (vs 33%).
On cash, views shifted moderately from overweight (25% in 2Q09 vs 33% in 1Q09) to underweight (25% in 2Q09 vs 17% in 1Q09).
Bonnie Tse, HSBC’s Head of Premier, Wealth Management and Mid-Market Segment for Personal Financial Services in Asia-Pacific, said: “Despite strong equity rallies at the end of the first quarter, the global economic outlook remains uncertain and markets will continue to be volatile. Fund managers are therefore more cautious and discriminating in their equity allocations to ensure they capture value and growth opportunities while staying focused on the relatively less volatile bonds sector, for quality and stability.
“Greater China remains the most favoured equities sector as recent economic indicators point to signs that the effects of the stimulus measures are starting to filter through the local economy.”
The HSBC survey analysed 12 of the world’s leading fund management houses1 by their funds under management (FUM), their asset allocation views and their global money flows. The net money flow2 estimates are derived from movements in FUM versus index movements in the equivalent class. At the end of the first quarter of 2009, the fund houses covered in the survey reported aggregated FUM of US$2.4 trillion, representing about 12.8 per cent of the estimated total global FUM3.
The survey shows that at the end of the first quarter of 2009, FUM decreased by US$102 billion, a drop of 4.05 per cent from 4Q08. Equity funds, which decreased by US$85.3 billion, contributed the most to total FUM decrease. Balanced funds and other funds saw a decrease while money market funds posted an increase in FUM.
Below are the net fund flows derived by subtracting market growth from FUM growth during the first quarter of 2009 in various asset classes:
Net flows as percentage of FUM for selected sectors
Asset class End 1Q09 End 4Q08
Emerging markets equities -1.6% -9.2%
Greater China equities +5.2% -4.4%
Global equities -2.7% +3.3%
High-yield/emerging markets bonds -5.4% -11.9%
Europe (including UK) bonds +9.2% +8.7%
US bonds +1.7% +2.9%
Greater China equities posted inflows in the first quarter of 2009 after investors pulled out of this sector late last year, showing increased confidence in the region’s recovery and growth prospects. Investors’ risk appetite for emerging markets/high yield bonds recovered given early signs of stabilising economies and improving credit markets.
Ms Tse said: “While investor confidence has slightly improved, investors remain cautious about the continued uncertainty in the global economy. Investors should remain in regular contact with their financial advisors to update their strategies — with a view to keeping a balanced and diversified portfolio. While investors are seeking selective growth opportunities in equity sectors such as in Greater China, they are still cautious as evidenced by their growing interest in more conservative instruments such as high grade corporate bonds. This reflects there is still a flight to quality amongst investors with capital preservations being upper most in their investment priorities until more certain long-term growth prospects emerge in the global economy.”
The HSBC Fund Flow Tracker, which represents cumulative dollar value of money flows covering the past 11 quarters, showed that within the equity funds sector, net inflows were recorded from 4Q08 to 1Q09.
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