The Man Group unit, which oversaw $24-billion globally at the end of the third quarter, switched to a positive view on China between September and October, said Andrew Swan, its Asia ex-Japan equities head. It’s focusing on a limited set of opportunities, including travel, entertainment, insurance and industrial automation shares, where China’s reopening could lead to positive earnings revisions that have yet to be priced in.
Beijing’s abrupt drop of Covid-Zero policies buoyed markets, underpinned by expectations of consumption and production growth. A Eurekahedge Pte measure of China stock hedge fund performance jumped 24% in the three months through January, four times that of the global average. The $51-million Man GLG Asia-Pacific ex-Japan Equity Alternative Fund returned an annualised 5% since it started in late 2020, according to data compiled by Bloomberg. A Eurekahedge gauge tracking performance of hedge funds focused on regional stocks was flattish during the period, as Beijing tightened its grip on the private sector while maintaining strict Covid controls.
With a lack of western-style Covid-era stimulus, household wealth in China hasn’t increased much, meaning the current “revenge spending” is likely unsustainable, he said.