An investor speaks on her mobile phone as she walks in front of an electronic board showing stock information at a brokerage house in Hangzhou, Zhejiang province, China, October 8, 2015. China stocks posted their biggest rise in two trading weeks on Thursday, catching up to a rebound in global markets after a week-long holiday, but trading remained thin, reflecting investor worries about the cooling economy. REUTERS
SHANGHAI: China fund managers further cut suggested equity holdings for the next three months to the lowest level in nearly one year, as the domestic stock markets remain rangebound in thin volume amid increasing uncertainties overseas.
Eight fund managers polled by Reuters cut their recommended equity allocations for the next three months to 68.1% from 71.9% a month ago.
The fund managers cut their recommended bond allocations to 7.5% from 8.8% last month, and also suggested increasing cash holdings to 24.4% from 19.4% a month ago.
"While a (US) rate hike has yet to materialise, investors' risk appetite might be dampened as Fed is seen most likely to take that action in December," a Shanghai-based fund manager said.
China's A-share market is expected to be more volatile in the fourth quarter, as investors are concerned about the instability in overseas markets.
These include a probable rate hike by the US Federal Reserve this year, a possible "black swan event" incurred by Italy's referendum, uncertainties in the US presidential election as well as a likely turning point in global liquidity, another fund manager said.
The US Fed kept interest rates unchanged in its September meeting. Italy will on Dec 4 hold a referendum on constitutional reforms, whose result could determine the destiny of its current government.
Suggested exposure to stocks of financial services companies and electronics firms was raised on average as they became safe-haven assets due to their lower valuations, while exposure to auto stocks was cut significantly to normal levels as speculation in auto-related subjects faded.
Suggested exposure to financial services stocks was boosted on average to 15.6% from 11.9% last month, and suggested exposure to auto stocks was cut to 4.4% from 7.5%.
China's stock market has lost 15% so far this year amid worries about the health of the domestic economy and a depreciating yuan.
Many investors have still not returned after a crash last summer that wiped out trillions of dollars in market value, prompting an unprecedented government rescue. - Reuters
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