Chinese fund managers are painting a positive outlook for 2013, based on a recovering macroeconomic situation and the expectation of higher stock market yields.

On a day when Asian markets slipped in holiday-hit trade, with investors unmoved by a slight improvement in key economic indicators out of China and Tokyo, experts told China Daily they expect Chinese stock markets to warm this year.

Liu Qingshan, the investment research director at Manulife TEDA Fund Management Co Ltd, said investors were likely to have more confidence as infrastructure construction and urbanization projects further push domestic demand.

Cao Xiongfei, the chief investment officer of Dacheng Fund Management Co Ltd, said that companies in various sectors may see potential growth, including those involved in pharmaceuticals, environmental protection, manufacturers with niche-market technologies and innovative service providers.

Their comments came as the latest official data showed manufacturing activity expanded at its fastest pace in almost a year last month, indicating China's economy was showing signs of improvement.

According to the latest reports from 70 fund management companies in China, compiled by TX Investment Consultancy, the financial information provider, a total of 1,274 funds reported combined profits of 126.7 billion yuan ($20.4 billion) last year.

Principal guaranteed funds saw a combined net return of 1.94 billion yuan, 75 times that of 2011, thanks to a stable recovery in the bond market.

Equity funds and hybrid funds contributed to most of the combined profits, as they realized total income of 80 billion yuan, about 63.5 percent of all the yields of funds in China in 2012, according to the TX information.

Combined income from fund management, fund custodian and commission for the 70 fund management companies saw significant drops.

Combined income from fund management dropped 10 percent from that in 2011 at 26 billion yuan, the analysis showed.

"Fund companies will see fiercer competition in 2013 as more sales channels are allowed and several banks are allowed to set up their own fund management companies," added Zhu Lei, analyst with Aijian Securities Co Ltd.

Five commercial banks, namely Bank of Ningbo Co, Industrial Bank, Bank of Beijing, Bank of Nanjing and Bank of Shanghai, have been allowed to set up fund management companies under a pilot program approved by the State Council.

The China Securities Regulatory Commission said that increased participation by banks in the pilot program will help develop more channels for savings to be orderly transferred into the capital market, involving more institutional investors, and boosting the development of the funds industry.

The commission said in March it will permit a wider range of companies, including foreign banks, to distribute products from local mutual fund managers as of June 1, which will give foreign lenders access to growing fund market.

By the end of 2012, China's fund management companies managed some 3.62 trillion yuan, a 31 percent year-on-year growth, according to statistics from CSRC.

wuyiyao@chinadaily.com.cn

(China Daily 04/02/2013 page16)