China Warehouse- More Than Crockery Message Board

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Strategies & Market Trends : China Warehouse- More Than Crockery

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To: RealMuLan who wrote (3227)	5/23/2004 11:08:07 AM
From: RealMuLan	Read Replies (1) of 6370

New Prudential fund covers India and China By GENEVIEVE CUA PRUDENTIAL Unit Trusts has launched a fund investing in India and China, a first to combine the two popular themes. While the PRU Dragon Peacock Fund is classified as high risk, its volatility is expected to be lower than that of single country India or China funds. The number of holdings is expected to range between 20 and 40 stocks, making it a more concentrated portfolio than most. Said Prudential Asset Management's chief investment officer (regional mutual funds) Nick Scott: 'We think a combination of the two is better than a single country on its own. We try to build in downside protection through a value style.' The fund can also invest in derivatives. At any single time, up to 75 per cent of the assets can be invested in one of the countries, although the neutral weighting is 50 per cent. The fund can also be invested up to 20 per cent in cash. The fund is not meant to be an absolute return portfolio. The correlation between the two markets is not high, says Mr Scott. 'They sometimes in history have very strong periods where they are independent of each other. So it is a great opportunity to switch between the two.' He said both the India and China markets look more attractive now after steep corrections. India's Sensex index fell 6 per cent last Friday and 11 per cent on Monday. As for China, concern that Chinese authorities are unable to dampen an overheating economy caused China-linked stocks and regional bourses to falter. 'Our sense is that India offers better value now after the recent falls. China is also better value than the fourth quarter when we thought things were overheating in the economic and stocks sense.' The fund can buy China stocks listed anywhere in the world, as long as the business is in China. Independent research firm BCA said in a May 18 report that share prices in India remain expensive. On China, it says the correction is probably halfway through, but most of its indicators do not yet signal a buy. 'The steep rise in prices in the last quarter of 2003 had an element of speculation that needed to be purged . . .' The sales charge will be 5 per cent; the annual management fee 1.5 per cent. There is a discount of up to 2 per cent on the sales charge during the offer period up to June 18. The fund is included in the CPF menu for Ordinary Account investment. business-times.asia1.com.sg

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