Top stock pickers seek gains in China energy, Japan real estate

Bloomberg :
Asia’s top-performing fund managers are seeking opportunities in battered Chinese stocks and turning selective on the hot artificial intelligence theme as the region comes off a tough year.

The MSCI Asia Pacific Index hugely underperformed global peers in 2023, with its 9% rise less than half the S&P 500’s advance.

The global backdrop now looks more favourable.

The Federal Reserve’s much-anticipated interest rate cuts are poised to add tailwinds while expectations are growing for Chinese equities to bottom out.

Still, Beijing’s policy uncertainty and a potential rise in volatility around elections in India and Taiwan make for a tricky investment landscape. The MSCI’s regional benchmark slid about 2% in the first week of 2024.

Looking ahead, here are some investment ideas by market-beating money managers focused on Asian equities.

Seek China value
Bao Wuke, one of China’s best-performing fund managers, is positive on the country’s energy firms and medical equipment makers.

His Invesco Great Wall Value Boundary Flexible Allocation Mixed Fund returned 16% in 2023 to beat more than 95% of its peers, according to data compiled by Bloomberg.

Bao’s performance stands out in a year when the CSI 300 benchmark fell 11% to post a third annual decline.

The nation’s energy sector has “high business barriers and more reasonable valuations,” while the medical device market presents “huge room for growth,” said Bao, a fund manager at Shenzhen-based Invesco Great Wall Fund Management.

“In the early stages of transition from conventional energy to renewable energy, there will be an underinvestment in conventional energy which means new supply in this area will be limited,” he added.