Invesco overweight on China, likes some Hong Kong REITs
10/11/2023 07:21
By Anisha Sircar
Nov 10 (Reuters) - Global asset manager Invesco IVZ.N
is overweight on Chinese assets in its Asian funds and adding
exposure to Hong Kong's beaten-down real estate sector where
dividend yields are lucrative, according to one of its Asian
portfolio managers.
The $2.5 billion Invesco Asia Equity fund grew its Hong Kong
and China position over the year, while taking profits from a
successful bet on Indian equities, Singapore-based fund manager
Fiona Yang, who helps manage the fund, said.
"We see a lot of immensely attractive, single-stock
investing opportunities in China, even with a much weaker macro
backdrop," Yang said.
That is in spite of heavy foreign selling as China's
post-COVID recovery has disappointed and sentiment has soured.
The Atlanta-headquartered firm's move shows at least some big
foreign investors are turning positive on the outlook.
"With investor expectations much lower as compared to the
beginning of 2023, a lot of these portfolio companies that we
have in China can out-deliver the lowered expectation," Yang
said in an interview.
"Even if the market doesn't re-rate, which we certainly hope
to see, the share price should move together with the earnings
delivery."
Holdings data published on the Invesco website shows an
allocation of about 42% of the fund to Hong Kong and China
companies, against a benchmark weighting of roughly 40%.
The proportion of the fund invested in companies such as
Chinese e-commerce firm JD.com 9618.HK JD.O or gaming
company Netease 9999.HK NTES.O has increased so far this
year, the data shows.
Hong Kong's property sector is another prospect for income,
Yang said, since share prices for Real Estate Investment Trusts
(REITs) have fallen far enough to push dividend yields to the 7%
to 8% range.
"If the interest rate does come down at some point, then we
have additional upside with valuation," she said.
(Reporting by Anisha Sircar in Bengaluru; Editing by Tom
Westbrook and Tomasz Janowski)
((anisha.sircar@thomsonreuters.com))