DOMESTIC fund managers hiked their suggested equity exposure for the next three months, even as the market environment grew more complex amid the trade war between China and the United States.

They raised their suggested equity allocations to 70.6 percent from 69.4 percent a month earlier, according to a poll of eight China-based fund managers conducted last week.

The fund managers have cut their suggested bond allocations for the coming three months to 10.6 percent from 13.1 percent, amid a wave of corporate bond defaults as credit risks emerged.

They have boosted recommended cash allocations to 18.8 percent from 17.5 percent in the previous month.

“The volatility has climbed, as there is a combination of factors that are disturbing the market, including China-U.S. trade tensions and rises in U.S. treasury yields,” a Shanghai-based fund manager said.

Worries over China-U.S. trade spat had eased somewhat after the two countries issued a joint statement regarding trade consultations.

However, sentiment was knocked after the United States said it still held the threat of imposing tariffs on US$50 billion in imports from China and would use it unless China addresses the issue of theft of American intellectual property.

China lashed out Wednesday at renewed threats from the White House on trade, warning that it was ready to fight back if the United States was looking for a trade war.

Overall, the fund managers surveyed held mixed views on asset allocations for the next month, with six recommending the same level of equity exposure and two suggesting an increase.

(SD-Agencies)