Top fund backs Tencent to drive Hong Kong index even higher
HONG KONG, Nov 21 — One of the world’s best-performing equity gauges is set for further gains in 2018 as tech giant Tencent Holdings Ltd and consumer stocks drive it higher, according to Shanghai-based money manager Wang Menghai.
Hong Kong’s Hang Seng Index has led the charge among Asia’s biggest markets this year, rising 34 per cent. Tencent accounts for nearly one-third of that advance. Wang, who works for Fullgoal Fund Management Co, has seen his fund beat 92 per cent of peers in 2017. He plans to stay loyal to Tencent, which just became the first Chinese tech stock to break the US$500 billion (RM2.07 trillion) market value barrier, and boost exposure to companies that may benefit from quickening inflation.
“The Hong Kong benchmark is very likely to perform well in 2018, though the index rally may not be as much as this year,” Wang said in a phone interview. “Some of this year’s best performers are worth holding as long-term bulls.”
Wang’s Fullgoal SH-SZ-HK Value Selected Flexible Allocation Mixed Fund, which manages about 3.2 billion yuan (US$483 million, RM2 billion), was weighted 9.68 per cent to Tencent in its third-quarter performance statement. The company’s share price has more than doubled in Hong Kong this year, but Wang’s not looking to take profit yet.
“We are optimistic about Tencent in the next two or three years,” he said. “It would be a wrong decision to sell it just for some short-term gain.”
Tencent’s shares were up 3.3 per cent at 10:25am today in Hong Kong, taking their four-day gain to 13 per cent. Wang also has holdings in smartphone suppliers Sunny Optical Technology Group Co, which was 6.4 per cent of the fund at the end of last quarter, and AAC Technologies Holdings Inc. Both these companies’ shares have also soared this year.
Going forward, Wang is interested in food and beverage companies and dairy and liquor producers because they may be able to hike selling prices amid quickening inflation. China’s consumer price index expanded 1.9 per cent in October, the fastest pace in nine months.
Demand from investors on the Chinese mainland will support Hong Kong stocks into next year, said Wang, who plans to continue investing 75 per cent of his portfolio in the city’s shares. Mainland investors have purchased more than 390 billion yuan of Hong Kong equities this year and November is poised to see the most buying this year on a monthly basis.
“The Hong Kong market is attractive to mainland investors since they can buy things that aren’t available on the mainland,” he said. “China’s economy is still growing at about 7 per cent annually and no doubt there will be a bunch of good companies — this isn’t a short-term trading opportunity.” — Bloomberg
Source: The Malay Mail Online