Chinese fund managers slashed their suggested equity weightings to four-month lows in December as fears of a possible deterioration in the eurozone debt crisis as well as economic slowdown at home dent appetite for risk.
The average recommended stock weighting over the next three months fell to 80.6 percent, the lowest level since August, from last month's 84.4 percent, according to the poll of nine China-based fund managers conducted this week.
Meanwhile, the suggested exposure to bonds and cash rose to 8.1 percent and 11.3 percent, respectively, from 6.6 percent and 9 percent a month earlier. "We're worried that the trend of economic slowdown could impact corporate earnings," said one of the surveyed fund managers, who declined to be identified. "Unless there's policy stimulus, there's little upward momentum."
China's economic growth has slowed for three consecutive quarters, expanding 9.1 percent during the July-September period, with most economists predicting that the trend to continue into the next year.
Some investors, however, view the slowdown could trigger further monetary easing by the government to support growth. Earlier this month, Beijing cut reserve requirements for commercial lenders for the first time in three years in a policy shift to ease credit strains.
"Liquidity situation may improve in the first quarter, and current stock valuation is reasonable... so we could be near the bottom," said one of the fund managers polled. Fund managers polled expected the benchmark Shanghai Composite Index, which hit a fresh 33-month low on Wednesday, to rise about 13 percent on average from the current level to 2,422 points over the next three months.
On sector allocation, fund managers slightly raised their suggested weightings of financial and property stocks to 15.6 percent and 8.7 percent respectively, while reduced recommended exposure to consumer stocks to 24.4 percent from 26.3 percent.
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