Yesterday we published a report from Credit Suisse Group AG (NYSE:CS) that pooled investor sentiment in Asian economies, where both hedge funds and long only funds had the highest overweight exposure in China.
However, Morgan Stanley (NYSE:MS)’s Investor Survey, China Pulse, tends to disagree from some of the findings of Credit Suisse Group AG (NYSE:CS). This survey analyzed responses from more than 200 investors, where the average sentiment is more bearish than the consensus estimates for China’s expected growth.
Yarra Square Partners returned 19.5% net in 2020, outperforming its benchmark, the S&P 500, which returned 18.4% throughout the year. According to a copy of the firm's fourth-quarter and full-year letter to investors, which ValueWalk has been able to review, 2020 was a year of two halves for the investment manager. Q1 2021 hedge fund Read More
In terms of GDP growth, 87 percent of the respondents thought it would fall below 8 percent, whereas Bloomberg’s consensus is at 8.1 percent. On a weighted average basis, the responders’ estimate for China GDP growth is 7.6 percent. The EPS growth on MSCI China is expected to fall below 10 percent, according to 61 percent of the survey participants; the Bloomberg consensus is 11.7 percent.
Most of the investors in MS’ survey expect China to miss the consensus GDP growth estimates and also lag on the EPS forecast on the MSCI China for the next 12 months. On a relative basis, investors have a better outlook on the Shanghai A-shares index versus the Hang Seng H shares or MSCI China versus the Hang Seng H shares. Investors expect both MSCI China and Shanghai A-shares index to return more than 10 percent while return on H shares are expected to fall below 10 percent.
The hedge fund and LO fund respondents in the survey, expect a 5.8 percent upside on Shanghai A-share Index and 5.4 percent for MSCI China. On Hang Seng Index, LO funds are more bullish with 4.5 percent vs. Hedge funds 3.6 percent. The figures are on a weighted-average basis.
In China, the investing community is bearish on Materials, Financials, Telecom and Energy which are expected to underperform on MSCI China index; however, there some positive outlook was communicated in Consumer Discretionary, Consumer Staples and Healthcare sector. If the responses from only the portfolio managers are analyzed, the group is even more bullish on Consumer Discretionary but lesser on Healthcare.
Morgan Stanley (NYSE:MS)’s survey pool was 57 percent long-only funds, 25 percent hedge funds while the rest were private equity firms, sovereign wealth funds and other MS clients. More than half of the respondents were portfolio managers.