Genuinely active emerging market fund managers are shunning Chinese banks and industrials amid concerns over rising debt burdens and fears of overcapacity in sectors such as oil refining, steel, coal and aluminum. According to the Financial Times, stockpicking fund managers are instead flooding into Asian technology-related stocks, such as chipmaker Taiwan Semiconductor, South Korea’s Samsung Electronics and Tencent, the Chinese internet group. Analysis of fund managers’ holdings is generally distorted by the fact that many managers are “closet” trackers, sticking closely to the weightings of the index they are benchmarked against in order to reduce the risk of significantly underperforming this benchmark.
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