TheEdge
PETALING JAYA: Local funds investing in equities in China, Hong Kong and Taiwan were worse hit compared with those investing in local assets over the past one year, in view of a sharper plunge in the China stock market amid global financial turmoil.
The credit crisis stemming from the US has caused a global sell-down and China’s stock markets were the worst hit in Asia year-to-date. This year alone, the Shanghai stock market has fallen about 62%.
Over the past one year, China’s Shanghai Composite Index plunged 65.3%, Shenzhen Composite Index slipped 65.5%, Hong Kong’s Hang Seng Index lost 48.2% and Taiwan Taiex Index fell 46.8%.
In comparison, the Kuala Lumpur Composite Index posted a relatively lower decline of 32.2% from a year ago.
Once a high-flier in the emerging markets, China did not see its performance this year as rosy as it was before. Global investors who were attracted to China’s growth story poured funds into the country only to see their funds’ net asset value (NAV) depleting.
To name a few, the NAV of Public Mutual Bhd’s Public China Select Fund fell 36% over a six-month period to 13.32 sen per unit on Oct 8 from 20.82 sen per unit on April 8. ING China Access Fund fell 34.2% to 33 sen per unit from 50.16 sen per unit over the same period, and Public China Ittikal Fund’s NAV declined by 31.2% to 14.8 sen per unit.
According to data by Lipper Fund, local funds investing in Greater China’s equities saw an average negative return of 38.38% over a one year period up to Sept 26, while those investing in Malaysian equities charted an average negative return of 19.4%.
While unit trust funds did not fare well overall, a fund manager told The Edge Financial Daily that investors should allow themselves a longer investment horizon to see the real return.
“Unless you are willing to take losses, there is no point selling the units now. Perhaps the only thing to do now is to be patient and wait and see,” he said.
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