For two fund managers at Fidelity International, the latest stimulus announcement from the Chinese government was significant enough to buy more of the battered real estate stocks. Since late September, Chinese authorities have introduced a series of progressive measures, including lowering interest rates and providing financial support for the completion of sold apartments. “This policy shift is significant because it is a coordinated series of support measures introduced by government agencies at all levels,” Fidelity International fund manager Theresa Zhou told CNBC on Wednesday. “We have been modestly improving our position in China,” Zhou said. She said the company became more aggressive on “certain cyclical names” in Chinese real estate after the September policy announcement, after previously focusing on online platforms in the industry. She said if household confidence returns, it will pave the way for stabilization of property prices, especially in China’s big cities. Zhou said that as of the end of 2023 and the beginning of this year, she has been worried about the real estate down cycle given the relatively high inventory and falling housing prices. Zhou and Ben Li are co-managers of Fidelity Greater China Fund. The company did not disclose specific stock transactions. “We have been selectively increasing positions in high-quality companies such as the consumer and real estate sectors,” Li said. “For the consumer and real estate sectors, we believe they have been hurt by the macro challenges of the past few years (and policies). “We believe that based on The consumption of experiences will continue to perform well,” he said, pointing to the company’s investments in online travel agencies. One of the Fidelity Greater China Fund’s top 10 holdings is Trip.com, a Chinese online booking platform, according to Daniel Zipser, a senior partner at McKinsey. The latest assessment of Chinese consumer confidence noted that real estate transactions increased by 2% in October and the first half of November, the first increase this year. “It is fair to say that consumption increased in October, creating a positive trend. Momentum.” These trade-in measures have boosted sales at companies such as Alibaba since the third quarter, Nomura Securities analysts said in a report on November 20. Helping increase sales of flat-panel TVs in China. They estimate that BOE and TCL Technology’s TV production line utilization may increase from October due to signs of demand growth. Nomura Securities rated the two Shenzhen-listed Chinese electronics companies. “Buy.” The two Fidelity fund managers emphasized that their strategy focuses on selecting companies based on individual competitive advantages, adding that it will take time to see the impact of the stimulus measures, and said that they are paying attention to the upcoming 12 months. and March government meetings to get more policy details. China’s top leaders usually gather in mid-December to discuss the measures and growth targets followed by a parliamentary meeting in March. announced. “Positive changes in the stimulus package are removing tail risks and setting the stage for the market,” Zhou said, noting that she was “cautiously optimistic” that earnings comments from major Chinese companies over the past two weeks underscored the time it will take to see stimulus. “When we talked to local businesses after the earnings announcement, we did feel that their tone had improved in terms of business confidence and expectations for next year, which was positive,” Zhou said. , she pointed out that Chinese companies have established overseas supply chains, which makes them better able to deal with President-elect Donald Trump’s tariff threats today than they were a few years ago.
