SHANGHAI - China's top-performing fund manager is favoring resource and agriculture stocks, as the country's government intensifies its fight against the worst inflation in three years amid rising commodity prices.
Oil prices may extend this year's surge amid concerns over supply disruptions in the Middle East, while demand for fuels will increase after Japan's worst earthquake on record spurred countries to shelve plans to develop nuclear energy, Wang Cheng, co-manager of the China Southern Long Yuan Equity Investment Fund (SOINLON), said in a May 3 interview from Shenzhen.
The $1.2 billion fund, which Wang runs with Jiang Pengchen, rose 10 percent in the first quarter of this year, making it the best performer among 735 tracked by Howbuy, a Shanghai-based fund research company.
PetroChina Co, China's biggest energy company, and Heilongjiang Agriculture Co, a producer of rice, soybeans, wheat and corn, accounted for 15 percent of the fund at the end of March, data compiled by Bloomberg show.
"We can find some investment opportunity in areas such as resources and agriculture," said Wang, who has been managing money for China Southern Fund Management Co since 2002.
"Recent global tensions have added fluctuations to commodity prices and brought negative impact to our inflation. The government will still focus on fighting inflation as labor costs will continue to rise and liquidity remains ample." She declined to specify changes to her holdings.
The benchmark Shanghai Composite Index has gained 1.7 percent this year on speculation that four interest rate increases since October will tame inflation without slowing the economy.
Consumer prices rose 5.4 percent in March from a year earlier, according to data from the statistics bureau on April 15, exceeding the government's full-year inflation target of 4 percent.
The economy expanded 9.7 percent in the first three months, topping economist projections for growth of 9.4 percent.
The Long Yuan fund has beaten 95 percent of its peers in the past year, according to data compiled by Bloomberg. Stocks accounted for 74 percent of its portfolio as of the end of March, while bonds took up 4 percent and cashed the remainder, according to the fund's quarterly report.
Wang's stock allocations are "low," reflecting the fund's conservative approach, said Zhang Haidong, an analyst at Z-Ben Advisors, a Shanghai-based funds adviser. The average stock allocation for 375 funds in the first quarter was 81.6 percent, down 1.7 percentage points from the previous quarter, Howbuy said in a report on April.
"Wang is among the most experienced players in the market," said Zhang. "Her bet on more anti-inflation measures is fair and safe at the moment."
Wang was described by China's Securities Journal on March 7 as the most senior among 128 female managers in the Chinese fund management industry.
Women account for 15 percent of the nation's fund managers, the newspaper said, citing statistics from TX Investment Consulting.
PetroChina, whose shares gained 6.1 percent last quarter, was Long Yuan's biggest holding as of the end of March, according to its quarterly report.