The Hindu Business Line : ABN Amro Fund to focus on Chinese consumption trends

Kolkata, Aug. 27 ABN Amro Mutual Fund, which has rolled out the country’s first fund that will invest in the Indian and Chinese markets, intends to bring into play the factors common to both economies, including their intention to scale up infrastructure spending.

The ABN Amro China-India Fund will try to focus on growing companies, ones that display earnings visibility in the broad context marked by, inter alia, better banking regimens, curbed fiscal deficits and improved foreign exchange reserves.

The fund, which will use a customised benchmark made up of BSE-200 (65 per cent) and FTSE China International Index (35 per cent), will try to take advantage of the common characteristics of the two countries, observed Ms Mandy Chan, Senior Portfolio Manager, ABN Amro Asset Management.

Both, for instance, draw strength from favourable demographic factors. Combined, their population accounts for 37 per cent of the world’s populace. As much as 50 per cent of India’s population and 40 per cent of China’s are below 25 years. By 2020, over 250 million people will be added to the 15-64 years age bracket.

Here, Ms Chan, who joined the Asian equity portfolio management team at ABN Amro Asset Management (Asia) in 2004, managing Hong Kong/China portfolios, replies to a few key questions.

Given the current state of the Chinese equity market, what sort of equities would the fund go in for?

We will keep in mind the government’s policy concerning various sectors at all times. Among the sectors we like are property development and heavy machinery. Both are witnessing considerable action at the moment. We will also explore companies that rely on consumer-oriented trends. Among the sectors we will go underweight on is telecom. We think valuation of telecom stocks is too demanding as of now.

What could induce Indian investors – who have typically invested in local stocks so far – look at the universe of Chinese stocks?

Earnings quality will be a major driver of the Chinese market. It witnessed considerable growth last year and corporate earnings growth played a crucial part in it. We think liquidity flows will remain positive. There is a range of positive factors to speak of as well. Consumption trends in China, for example, are encouraging, reflecting enhanced aspirations of people. An Indian investor, who has so far only known about the growth in the Chinese market, should now be prompted to make an allocation.

Which are the areas of concern… say, a decline in GDP growth rates?

Government policies as we said will play the most significant role. Take, for example, the policy on interest rates. Rates have been raised earlier, but we do not think these will be raised over and over again in the near future. Among the issues that should be focused on are those related to infrastructure development and increased long-term production capabilities.

More Stories on : Mutual Funds | Overseas Investments

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
‘Without SME, India’s growth story will not happen’

Mid-caps back on equity funds’ focus

ABN Amro Fund to focus on Chinese consumption trends

Vikas WSP makes a comeback after 6 years

Bull domination

DSE demutualisation process complete

FIIs buying drives Sensex up 417 points

Consolidation Construction plans to raise Rs 200 cr

Take Solutions debuts on NSE