AFTER almost a month of watching Chinese stocks in free fall, some U.S. fund managers are buying shares at what they consider distressed prices, though they predict continuing volatility — and perhaps more declines — ahead.

    U.S. investors say that they remain largely bullish that consumer spending in China will expand and the fallout from the stock market crisis will be limited to the relatively small upper class of speculators that own A shares.

    Fund managers say the volatility and selloff is making the Chinese market more attractive for long-term investors, even if the market has not hit bottom yet.

    Emily Alejos, portfolio manager of the US$20.8 million Nuveen Tradewinds Emerging Markets fund, noted that companies that focus on domestic consumption in China are trading at enticing prices.

    “For a long-term investor, some of these valuations [in H shares] are quite compelling,” she said, adding that the steep declines are not affecting her outlook for the Chinese economy because the losses in wealth among the relatively small percentage of Chinese who own stocks are not likely to dent the country’s expected economic growth of 7 percent.

    Frederick Jiang, co-manager of the US$724 million Ivy Emerging Markets Equity fund, echoed that sentiment.

    “If you look at the Chinese market, it’s a bipolar market with the high growth A shares trading at very expensive valuations and the H shares trading below 10. It’s probably the cheapest major market in the world,” he said. (SD-Agencies)