Fund Managers Remain Bullish on China

Portfolio managers who concentrate on China obviously are proponents of the region, but even following the one-day 9% meltdown in China’s markets, many remain bullish, Investor’s Business Daily reports.

They note that the Shanghai composite index has recouped its losses and the economic indicators show the country is on a positive streak, and they remind investors of how tremendously well the markets did in 2006.

When the market tumbled on Feb. 27, Edmund Harriss, director of Guinness Atkinson Asset Management, immediately sent a letter to try an quell investors’ concerns: “While these moves may seem dramatic, they should be seen in the contest of a rise in Shanghai of 135.54% in 2006.

“We do not believe that China’s stock markets are a barometer of China’s economic well-being or otherwise, and certainly cannot be used to gauge global prospects. This was a technical pullback.”

Like many other managers at a time of a market decline, Harriss called the sell-off a buying opportunity.

Verendra Singh, a senior economist with economy.com, agrees that the steep decline is not an indicated of further declines to come. “The timing of a downturn is difficult to predict, but it certainly is not now. The most likely time is after the 2008 Olympics, which should bring an end to major government infrastructure projects and, along with it, a significant drop in fixed investment.”

Although Samantha Ho, managing of the AIM China Fund, believes returns will slow this year, they will still be strong. “China continues to offer high economic and earnings growth relative to other developed and emerging countries,” she said. The nation “will continue to be a magnet for excess liquidity and fund inflows in 2007.”

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