SHANGHAI - China Asset Management Co, the nation's biggest mutual fund company, boosted its holdings in property stocks in its flagship fund in the fourth quarter even as the government tightened policies to curb asset bubbles.
Wang Yawei increased the proportion of real estate shares in his China AMC Large-Cap Selected Fund to 19 percent from 13 percent, while cutting holdings of banks and insurers to 20 percent from 24 percent. China AMC had 7.7 billion yuan in assets ($1.2 billion) as of Dec 31, a quarterly report posted on its website showed.
The fund has beaten 97 percent of rivals over the past five years, according to data compiled by Bloomberg.
A gauge of property stocks in the Shanghai Composite Index jumped 4.7 percent on Friday, the most among the five groups and the biggest gain since Jan 4. The benchmark measure climbed 1.9 percent. Goldman Sachs Group Inc also boosted its stock rating for Chinese real estate shares to "overweight" on Friday, citing the prospect of "more decisive policy action" in the near term.
"China's stock market will continue to fluctuate," Wang said in the report. "Investment opportunities may depend on China's inflation levels."
The nation's property stocks are rebounding this year on speculation that rising demand for real estate will bolster prices, which climbed for a 19th month in December. The gauge of developers has jumped 4.3 percent in 2011, compared with a 2.9 percent slump for the broader index. Wang increased his equities allocation to 89.3 percent as of Dec 31, compared with 87.8 percent in the previous quarter, the report showed.
The property gauge plunged 28 percent in 2010, the most among the five industry groups, as Premier Wen Jiabao's government ordered banks to set aside more reserves six times and boosted interest rates twice to tame inflation and curb asset bubbles after record gains in lending and property prices.
Jim Chanos, the hedge fund manager who was one of the first investors to foresee the 2001 collapse of Enron Corp, said last month that China's property boom continues "unabated" and has even picked up since the government enacted policies to cool speculation.
Wang cut his holdings of Industrial and Commercial Bank of China Ltd and China Construction Bank Corp, the nation's two largest lenders, in the fourth quarter. He bought shares of China Unicom Network Communications Ltd, making it No 7 on the list of his top 10 biggest holdings. Xinjiang Guanghui Industry Co, a real estate company that has surged 76 percent over the past year, remained the biggest holding, while China Gezhouba Group Co and China Construction Bank ranked second and third.
