Sharechat Logo

China Manager Who Sold Stocks Before Rout Says Worse Coming

Thursday 30th April 2020

Text too small?

The current stability in Chinese stocks isn’t luring Pan Yue, who is waiting for the Shanghai equity benchmark to fall a further 25% before she’d consider stepping back in.

Pan, a fund manager at Winbro Asset Management Co. in Beijing, is holding 80% cash and 20% bonds in two equity-focused funds that she oversees. She sold all her stock positions before the Lunar New Year holidays began in late January amid concern the spreading coronavirus outbreak would weigh on the market. The Shanghai Composite Index has dropped by about 5% since the holidays started.

One of the funds Pan managed last year at her previous employer -- Beijing Jinghong Investment Co. -- returned 90% for investors between January and November when she changed firms, according to, a Chinese financial-data provider. The Shanghai Composite Index rose 18% in the same period. The two Winbro funds she now manages, which target a select group of clients, both returned around 7% this year as of Monday, according to an internal document seen by Bloomberg.

“Those who at this point still expect a V-shaped recovery would be displaying optimism fueled by ignorance,” said Pan of markets and the wider economy, from her home in the Beijing suburbs where she has stayed since the virus outbreak. She manages about 200 million yuan ($28 million).

“I don’t think a drop of 10% from this year’s peak is enough for some to be calling a bottom,” she said. The Shanghai Composite Index should be “reaching approximately the 2,100 level before I’m willing to call a bottom and start buying.” Making bets now could yield a 10% upside, but the chances of a drop are much higher, she said.

A decline back to 2,100 would take the index to a level last seen in 2014. The gauge, which hasn’t fallen into a bear market unlike benchmarks in other major global equity exchanges, has risen 2.7% this month as of Wednesday, on pace for its first gain for the year. 

Pan’s case is predicated on earnings deteriorating further, with the impact of the coronavirus lasting as long as three years. Stimulus announced by the Chinese government won’t return the country’s economy to the same pace of expansion as before the pandemic, according to Pan.

“The shock to earnings may only show up in the second or third quarter,” she said. “We don’t have to have fabulous growth of around 6% each year -- that’s not what the polices are aiming for. But that also means we need to start getting realistic in pricing stocks.”

— With assistance by Sharon Chen, and April Ma

Source: Bloomberg 

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Talisman Quarterly Activities Report to 30 June 2020
General Capital gives notice of Annual Meeting
Scales Corporation - Business Update
Fonterra Co-operative Group Global Dairy Update
Fonterra revises its 2019/20 and 2020/21 forecast Farmgate Milk Price ranges
Briscoe Group Limited Market update: 2nd Quarter Sales to 26 July 2020
thl market update - A frame work for 2021
Me Today - Outcome Of Share Purchase Plan Offer
Maxigesic IV® licensed in six new European nations
Evolve Shareholder Update

IRG See IRG research reports