JF Asset Sees Further 10% Gain in China Shares

Mainland Chinese companies traded in Hong Kong are likely to rise a further 10 percent by year-end, buoyed by rising profits and China's booming growth, JF Asset Management's top China fund manager said on Tuesday.

While there is a risk of a near-term correction, it is more likely that the market will enter a consolidation phase before climbing to new highs, said Howard Wang, head of the firm's Greater China team.

"When you look at the broad picture, number one, this is one of the few places in the world in which the question is, 'How much economic growth do you want?' Most places in the world, as we know, are struggling with growth and credit conditions," he told the Reuters China Century Summit in Hong Kong.

"Almost uniformly, (Chinese) companies have either been pre-announcing earnings surprises, or reporting earnings surprises on the upside, so from a corporate standpoint, I think we're in pretty good shape."

He said an additional 10 percent gain was likely for the China Enterprises index of H-shares and the MSCI China index, which have both risen more than 40 percent so far this year.

The benchmark Shanghai benchmark stock index, which has doubled in value so far this year, is likely to rise even more than 10 percent before year-end as long as the government is comfortable with the fundamentals of the market, he added.

Wang is co-manager of the $744.6 million JF Greater China fund.

The fund returned 28.4 percent in the first seven months of the year, beating its benchmark, the MSCI Golden Dragon index, which returned 21 percent with dividends reinvested over the same period.

The largest holdings in the fund at the end of June included China Mobile, Taiwan Semiconductor Manufacturing Co Ltd, Hon Hai Precision Industry Co Ltd and China Life Insurance Co.

Hong Kong-based JF Asset, which manages about $36 billion, is part of the fund management arm of JPMorgan Chase & Co. JPMorgan Asset Management had $1.1 trillion in assets under management at the end of June.