Exposure to stocks should be lowered - Chinese fund managers

By IVCPOST Staff Reporter

Jun 29, 2013 11:45 AM EDT

Fund managers from China lowered their preferred exposure to bonds and stocks this June as concerns regarding the effects of a cash squeeze in the money market were raised. The analysis was based on a recent Reuters fund poll conducted among Chinese fund managers showed on Friday.

The recommended equity weighting averages at 83.5%, which is slightly lower than last month's 83.7% showing. The data was compiled from monthly polls.

Suggested bond holdings were slashed by fund managers to 5.75% from 8.4% last month. This came after recommended cash holdings were increased from 7.9% up to 10.8%

"If the liquidity shortage spreads to the real economy, lending rates will rise, thus increasing costs for companies and impacting their earnings," mused one money manager who wished to remain anonymous.

The rates of money market skyrocketed last week as the plan to inject liquidity into the interbank money was rejected by the central bank. Fears of a credit crunch spread throughout the domestic and global markets.

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