@Peter C --- you know i didn't take my investments out, right? Let's say i gained quite a bit of money just in 2 weeks' time, LOL! I think my fellow Japanese know what to do....
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Japan Investors Use China Market Rout as a Chance to Buy
TOKYO—Some Japanese investors have used the recent market rout in China as a buying opportunity, reasoning that growth opportunities there make battered Chinese equities worth acquiring.
Japan’s Dai-ichi Life Insurance Co. bought Chinese stocks after markets peaked in mid-June by using cash made from trimming some holdings as shares surged earlier in the year, said Koya Iwabuchi, the company’s general manager of equity investment.
“The growth rate has slowed down, but [the economy] is still expanding at 6% or so. Corporate value growth will also likely be attractive,” he said.
Mr. Iwabuchi said foreign investors in mainland-listed stocks generally understand “risks unique to China, albeit to a varying degree.” Trading suspensions affected about a fifth of Dai-ichi’s China stocks at one point. Dai-ichi started investing there in 2006 as part of the Qualified Foreign Institutional Investor program.
For Japanese investors, China is a relatively small but increasingly important market. Holdings of Chinese stocks by Japanese investors increased 67% to ¥1.6 trillion ($12.9 billion) at the end of 2014 from a year earlier, according to Bank of Japan data.
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China’s aggressive response to the collapse in share prices—which included a pledge from the People’s Bank of China to provide liquidity—appeared to help stabilize the markets. The Shanghai market has recovered from its decline earlier this month and is still up 27% so far this year.
But some of the steps that were taken raised concerns among foreign investors. One foreign manager of Chinese shares said he was surprised that Beijing encouraged buybacks.
Widespread trading suspensions, ostensibly based on company requests, spooked Western investors and led them to question the integrity of the Chinese markets.
Still, a number of Asia-based investment managers say some Chinese companies had to suspend trading because they borrowed money from banks and used their shares as collateral. They also said because many of the suspended stocks were from smaller companies, listed in Shenzhen, international investors weren’t greatly affected because they typically prefer large-cap stocks.
Tan Eng Teck, senior portfolio manager at a Singapore-based unit of Japan’s Nikko Asset Management Co., said his team has been buying Chinese stocks that have long-term potential in sectors such as health care, automation and technology.
“We have taken advantage to actually go in and buy up some of the stocks that have been unduly punished,” he said.
Like many Western investors, some Japanese managers were turned off by the fact that they couldn’t freely trade their shares. Toshiyuki Murai, Hong Kong-based chief investment officer for Asia excluding Japan at Sumitomo Mitsui Asset Management Co., said the widespread suspensions created mistrust among global investors.
Still, others are more accustomed to Chinese state controls and hope Chinese retail investors take a lesson from their stock investing, much of it financed with borrowed money.
Nikko’s Mr. Tan said Chinese investors drove stocks higher earlier this year in the sectors he sees as growth areas, but they didn’t appear to pay enough attention to how expensive those stocks already were. “In a way, the Chinese were kind of rational in where they have moved, but not rational in terms of valuation,” he said.
Dai-ichi’s Mr. Iwabuchi said, “During these wild gyrations, those who were most surprised or those who sweated with fear are probably Chinese retail investors. Retail investors, who are said to make up 70% of the trading, will be more cautious going forward. I’m hoping that will probably lead to some stability in the market.”
Japan Investors Use China Market Rout as a Chance to Buy - WSJ
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Japan Investors Use China Market Rout as a Chance to Buy
TOKYO—Some Japanese investors have used the recent market rout in China as a buying opportunity, reasoning that growth opportunities there make battered Chinese equities worth acquiring.
Japan’s Dai-ichi Life Insurance Co. bought Chinese stocks after markets peaked in mid-June by using cash made from trimming some holdings as shares surged earlier in the year, said Koya Iwabuchi, the company’s general manager of equity investment.
“The growth rate has slowed down, but [the economy] is still expanding at 6% or so. Corporate value growth will also likely be attractive,” he said.
Mr. Iwabuchi said foreign investors in mainland-listed stocks generally understand “risks unique to China, albeit to a varying degree.” Trading suspensions affected about a fifth of Dai-ichi’s China stocks at one point. Dai-ichi started investing there in 2006 as part of the Qualified Foreign Institutional Investor program.
For Japanese investors, China is a relatively small but increasingly important market. Holdings of Chinese stocks by Japanese investors increased 67% to ¥1.6 trillion ($12.9 billion) at the end of 2014 from a year earlier, according to Bank of Japan data.
Advertisement
China’s aggressive response to the collapse in share prices—which included a pledge from the People’s Bank of China to provide liquidity—appeared to help stabilize the markets. The Shanghai market has recovered from its decline earlier this month and is still up 27% so far this year.
But some of the steps that were taken raised concerns among foreign investors. One foreign manager of Chinese shares said he was surprised that Beijing encouraged buybacks.
Widespread trading suspensions, ostensibly based on company requests, spooked Western investors and led them to question the integrity of the Chinese markets.
Still, a number of Asia-based investment managers say some Chinese companies had to suspend trading because they borrowed money from banks and used their shares as collateral. They also said because many of the suspended stocks were from smaller companies, listed in Shenzhen, international investors weren’t greatly affected because they typically prefer large-cap stocks.
Tan Eng Teck, senior portfolio manager at a Singapore-based unit of Japan’s Nikko Asset Management Co., said his team has been buying Chinese stocks that have long-term potential in sectors such as health care, automation and technology.
“We have taken advantage to actually go in and buy up some of the stocks that have been unduly punished,” he said.
Like many Western investors, some Japanese managers were turned off by the fact that they couldn’t freely trade their shares. Toshiyuki Murai, Hong Kong-based chief investment officer for Asia excluding Japan at Sumitomo Mitsui Asset Management Co., said the widespread suspensions created mistrust among global investors.
Still, others are more accustomed to Chinese state controls and hope Chinese retail investors take a lesson from their stock investing, much of it financed with borrowed money.
Nikko’s Mr. Tan said Chinese investors drove stocks higher earlier this year in the sectors he sees as growth areas, but they didn’t appear to pay enough attention to how expensive those stocks already were. “In a way, the Chinese were kind of rational in where they have moved, but not rational in terms of valuation,” he said.
Dai-ichi’s Mr. Iwabuchi said, “During these wild gyrations, those who were most surprised or those who sweated with fear are probably Chinese retail investors. Retail investors, who are said to make up 70% of the trading, will be more cautious going forward. I’m hoping that will probably lead to some stability in the market.”
Japan Investors Use China Market Rout as a Chance to Buy - WSJ
