Business / Markets

Funds' yields may coast on two sessions

By Wu Yiyao (China Daily) Updated: 2016-03-07 09:31

Any positive news from the "two sessions" will likely improve yields of equity funds that focus on stocks of companies in real estate, healthcare and technology sectors, and those that will gain from supply-side reforms, said fund managers.

The two sessions refer to the ongoing meetings of National People's Congress, the top legislature, and the Chinese People's Political Consultative Conference, the top advisory body.

While the NPC's session that began on Saturday will end on March 16, the CPPCC's session that began on Thursday will end on March 14.

By March 16, the sessions will have likely announced detailed policies for economic growth, reforms and focus areas for improving social well-being.

Economic reforms and focus on environment-friendly and sustainable growth driven by domestic consumption, which are on the two sessions' agendas, will set the tone for future investment trends, said analysts.

A research note from Shenzhen-based Bosera Funds said the key issues currently being discussed at the two sessions, have been already influencing investment decisions for a while. For, the thrust over the last year on the Belt and Road Initiative, the Internet Plus strategy, and upgradation of the manufacturing sector has created opportunities for small investors and institutional investors alike.

The note further said the two sessions' focus on supply-side reforms will create investment opportunities in many sectors, including food and beverage, retail, steel, coal, ferrous metals, construction materials, real estate and transport.

Infrastructure-related companies, particularly those engaged in high-speed railway projects, have already seen their share price rising in the last week.

Open-ended equity funds, which include such companies in their portfolios, also reported rising yields in recent weeks.

According to Shanghai-based WIND Information Technology Co Ltd, 33 companies listed in Shanghai and Shenzhen, which have been included in the "high-speed railway sector", reported average share price growth of 3.27 percent last week, with the best-performing ones gaining more than 8 percent.

Real estate developers also have potential to appreciate, said researchers.

Catherine Chen, research director with LaSalle Investment's China operations, said policies driving the opening up of the financial market and growing e-business sectors will push up demand for quality commercial properties such as high-end office buildings in first-tier cities, and industrial properties such as standardized warehouses in gateway cities, which present investment opportunities.

A research note from Shenzhen-based Essenses Securities Co Ltd said technology companies, including those that make smart vehicles, virtual reality gadgets, artificial intelligence machines, and personal entertainment systems, are likely to see improved performance, given China's emphasis on innovation.

"The 'Internet of Vehicles' may see a combined market size nationwide of around 300 billion yuan ($45.81 billion) in the next five years," said the Essenses report.

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