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July 7, 2016

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QFII funds stop losses with gains in June

FOREIGN and domestic funds investing in Chinese equities staunched losses in the first half of the year when they posted gains in June as the stock market stabilized.

Funds under the Qualified Foreign Institutional Investor scheme, a main gateway for foreign investors to tap China’s securities market, made an average return of 2.23 percent last month, according to the latest figures compiled by Lipper, a unit of Thomson Reuters.

Their return was slightly below an average return of 2.85 percent posted by domestic stock-invested mutual funds, data showed. By comparison, the Shanghai Composite Index edged up 0.45 percent in June while the CSI 300 Index dipped by 0.5 percent.

“There is no obvious change in QFIIs’ investment style,” said Xav Feng, head of Lipper Asia-Pacific research. “They tend to make heavy purchases of large-cap blue-chip stocks, which have underperformed. That’s why foreign funds lagged behind domestic funds.”

From January to June, foreign funds suffered an average loss of 11.63 percent, smaller than an average loss of 13.84 percent for domestic funds.

However, there were some exceptions as some foreign funds that traded yuan-backed shares yielded substantial profits for investors.

Flexifund Equity China A, a joint venture between BNP Paribas Investment Management and Haitong Securities Co, returned 2.9 percent in June and 57.5 percent in the first half of the year.


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