ONE top fund manager in China has been shifting to cash since April, worried that the Sino-U.S. trade friction would extend a slump in Chinese stocks.

And so far, Jiang Yiqian, head of China equities at Harvest Global Investments Ltd., has been right to be cautious. The MSCI China Index is down more than 11 percent from a January peak, with losses extending last week as the trade spat between the United States and China intensified.

“We don’t think that the market will have a very strong performance in the near term,” Jiang said.

Jiang has boosted cash holdings in her flagship fund to the highest level since she started managing the fund three years ago, she said. Recently, cash comprised about 15 percent of assets.

The world’s two biggest economies have fired the opening shots in a trade war, with China vowing to retaliate forcefully against U.S. President Donald Trump’s vow to slap heavy duties on Chinese imports. Chinese shares tumbled after the U.S. president’s move, with the MSCI China gauge sinking 3 percent Tuesday.

Still, Jiang said over a longer investment horizon, she’s more optimistic.

“It’s not that we are bearish about China,” Jiang said. “It’s a tactical position, as we expect the market to remain volatile in the near term,” she said. With projected profit growth in the “mid-teen” percentage level at firms this year, “China is still the most important earnings per share driver for emerging markets. So we are still positive.”

Jiang’s team oversees about US$2 billion in assets. Her flagship fund, which focuses on offshore Chinese stocks, beat 94 percent of peers over the past three years. She also manages an A-share fund that’s outperforming almost all competitors over the past year. Jiang has worked for Harvest Global Investments, the overseas arm of one of China’s biggest fund houses, since 2009.

Jiang plans to keep as much as 9 percent of assets across all her funds invested in health care companies, more than double the sector’s weight in the MSCI China measure. She said industry leaders will increase their market share after reforms including speeding up drug approvals. She also added banks on cheap valuations and improving asset quality in the first quarter. (SD-Agencies)