DOMESTIC fund managers raised suggested equity exposure for the next three months, for the second month in a row, according to a monthly poll conducted before Friday’s market slide, indicating a pick-up in risk appetite and investor optimism.

    They increased suggested equity allocations for the next three months to 69.4 percent from 68.1 percent in October, according to a poll of eight fund managers conducted last week.

    Meanwhile, the fund managers increased their suggested bond allocation slightly to 14.4 percent from 13.8 percent a month ago and reduced recommended cash weightings to 16.3 percent.

    “There are more opportunities than risks in the market, where you may start to see sector rotations,” said a fund manager in Shanghai. “But the risk of a correction is also increasing as the market has risen a lot since September.”

    He added that the stock market appeared to be more appealing as bond yields have edged down and investor risk appetite would be boosted by sustained profits in the stock market.

    Some fund managers, however, pointed to short-term risks in the market, including the high possibility of a rise in U.S. interest rates, pressure from yuan depreciation and weak Chinese economic data, the poll found.

    The poll was conducted before Friday, when China’s stock market tumbled in its biggest one-day loss since the summer market rout, following news that regulators had widened a probe into securities firms.

    A fund manager said that the market’s correction was “natural” and does not change longer-term expectations.

    The U.S. Federal Reserve kept interest rates unchanged in October but has left the door open to tightening monetary policy at its next meeting in December.

    Seven fund managers forecasted on average that the Shanghai Composite Index would climb to 3,564.3 points, higher than the forecast made in October and the current level. Most of the fund managers expected that it would exceed 3,700 points. (SD-Agencies)