In the midst of the existential crisis of the Chinese real estate giant Evergrande, whose possible bankruptcy and the payments of its maturities are followed in minute and result from the side of investors due to the possible contagion to the Chinese economy and global markets, the manager Eurizon dares with a new fund that invests in both bonds and shares of the Asian country.
The group asset manager Intesa Sanpaolo has expanded its capacity in China with the launch of the Eurizon Fund-China Opportunity, a mixed fund delegated to Eurizon SLJ Capital, Eurizon’s London-based asset manager. It builds on the existing renminbi bond strategy, managed by Stephen Li Jen and Monica Wang, both Mandarin speakers and with extensive experience in Chinese markets, combined with Chinese equity capabilities developed by Hong Kong-based subsidiary Eurizon Capital Asia.
In contrast to other large fixed income markets, “Chinese bonds have historically offered a higher return and the renminbi bond market has behaved like a haven asset during periods of global risk.
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For its part, wields Eurizon, “the depth and breadth of China’s domestic equity market offers foreign investors diversification advantages, especially in the fast-growing sectors of the new Chinese economy. This, combined with the influence of economic and monetary policies, results in a unique opportunity, with a low correlation with traditional asset classes.”
The Eurizon Fund-China Opportunity combines the safe-haven characteristics of the $20 trillion Chinese bond market with the long-term growth opportunities of Chinese equities. At launch, the fund has an 80% weighting in bonds offshore more liquid and highly rated, and a 20% allocation to equities.