Fidelity’s Ma adds to risk positions after China sell-off

Fidelity manager sees opportunities within Chinese retail sector after correction.

Fidelity’s China Consumer fund manager Raymond Ma is set to move less defensive as valuations look more attractive after the September sell-off.

Ma said the falls suffered by Chinese equities in the past week in particular have made sectors such as consumer discretionary look more attractive, in part due to the resilience of Chinese retail sales figures.

Hong Kong’s Hang Seng fell by more than 9% last week, and by 1.5% on Monday, as investors took flight from equities across the globe.

Ma said it is difficult to predict the timing or nature of a resolution to the eurozone crisis, but suggested he is on surer footing in terms of his view of the Chinese economy.

“The thing I am more certain of is my belief Chinese  growth will remain strong. I am trying to be less defensive. I think some discretionary names, the good quality companies, have been oversold”, said Ma.

Consumer discretionary remained Ma’s largest sector bet within his $296m fund over the summer, but his defensive attitude had seen its weighting fall from 30% to 25.7%.

The manager also pared holdings in insurance companies and heavily increased his telecoms exposure over the past three months but is now looking again at consumer discretionaries.

Ma said he had been adding to discretionary stocks which have seen P/E ratios fall from 20 times earnings to 15 times earnings amid the sell-off, and pointed to August’s “outstanding” year-on-year retail sales growth of 17% as evidence of the Chinese consumer’s resilience.

“Retail sales growth will come down from 17% to around 13%-15% next year, but we will see double digit growth next year whatever the state of the global economy,” Ma said.