CHINESE fund managers will raise the proportion of their portfolios invested in stocks over the next three months, a recent poll shows, confident that the market has further to run after surging 80 percent since November.

    They increased their suggested equity allocation for the next three months to 81.3 percent from 79.4 percent a month ago, while lowering their bond allocation to 8.3 percent from 10.8 percent in March, according to a poll of eight China-based managers.

    Their suggested cash allocation increased to 10.5 percent from 9.9 percent a month earlier.

    “As the stock indices keep rising, risk is accumulating,” said a fund manager based in South China.

    “But the prospect of making money is drawing abundant liquidity into the market, making deep corrections unlikely in the short term.”

    Many fund managers believed that a further loosening of monetary policies and fresh economic stimulus would add fuel to the stock market, but they are also closely monitoring the government’s reaction to the liquidity-driven rally, which has prompted many small and large investors to borrow money as they speculate on more gains.

    China’s bull market “has just begun,” a website run by the People’s Daily newspaper said two weeks ago, calling the surge in share prices a fair reflection of the country’s growth potential and denying that it was a bubble.

    At the same time, Xinhua has warned against “irrational exuberance.”

    In terms of sector allocation, fund managers lowered their suggested weighting for electronics and technology stocks, but recommend higher allocation for financial and machinery shares.

    A Shanghai-based fund manager said that investors keep bargain hunting among stocks that are deemed relatively undervalued.

    For electronics stocks, the average recommended allocation fell to 18.8 percent from 19.1 percent last month. The weightings for financial shares rose to 18.1 percent from 16.3 percent in March. (SD-Agencies)