Money Management looked at equities invested in the Asia Pacific ex Japan and found one fund still stands despite China’s drag.
Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management said Chinese growth was on the course to deceleration, and the macro outlook for 2019 would be affected not only by the trade conflict, but potential macro and FX regime shifts and reduced policy flexibility.
Mitra said cracks had emerged in retail sales and in the property sector, and credit growth had continued to remain sluggish despite increased rhetoric around easing funding for private companies.
“The ongoing downturn in the auto sector is becoming a drag on retail sales as well as industrial production,” said Mitra. “The expiry of tax breaks has not been renewed. It seems the authorities are less certain of the impulse in sales and production from any renewed, prospective reduction in auto sales taxes. Meanwhile, auto import tariffs have been lowered, for non-US producers.”
With this in mind, it’s probably no surprise only one fund has managed to stay above the line in the six months to date.
Lakehouse Small Companies has managed to produce positive returns of 2.08 per cent in this timeframe, with the rest of the sector dropping into the negative.
Despite this though, 12 funds have managed to remain above the MSCI Asia ex Japan index, which dropped to -12.82 per cent returns for this period.
Namely, SGH Tiger returned -1.43 per cent in that time, and CFS’ Asian Growth fund returned -5.19 per cent, which is still more than double that of the index.
The chart below shows the performance of the top five funds in the sector as compared to the MSCI Asia ex Japan index for the six months to date.
