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QINGDAO TODAY
在线翻译:
szdaily -> Business/Markets -> 
Some fund managers look to bonds
    2019-01-23  08:53    Shenzhen Daily

DESPITE signs of an economic slowdown, 2019 is off to a good start for fund manager Du Zhenye.

His Shanghai-based ChangAn Xinyi Enhanced Mixed Fund has increased its assets over the past two weeks by shunning stocks for bonds. And it was the best-performing of nearly 3,000 mixed funds ranked by Haitong Securities for 2018, returning more than 14 percent.

“I don’t dare say it’s already the bottom of the stock market,” Du said.

He’s not alone in favoring bonds over equities. Slowing growth signals an earnings slump after a brutal 2018, when the Shanghai Composite Index tumbled 25 percent.

For some, bonds retain a shine as policymakers combat the slowdown with more stimulus. The phased inclusion of some bonds in global indexes starting this year also should draw inflows.

“We believe this year will be another bullish one for bonds,” said Du.

According to Shanghai consultancy Z-Ben Advisors, assets under management (AUM) at domestic equity mutual funds shrank 12 percent in the fourth quarter from a year earlier to 194 billion yuan (US$28.62 billion) while fixed income funds expanded 20 percent to 3 trillion yuan.

That was one factor driving yields on benchmark 10-year government bonds down nearly 40 basis points in the quarter.

More policy easing could further cut yields, implying more gains for bondholders.

While authorities rule out “flood-type stimulus” to juice growth, they have pumped cash into the banking system to boost lending.

Josh Sheng, chief investment officer at Shanghai Tongshengtonghui Asset Management, said fresh cash should fuel further gains in bonds, both sovereign and corporate. (SD-Agencies)

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