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July Drags China Equity MPFs to YTD Losses

Managers were unable to dodge an unexpected, heavy sell-off following regulatory ruffles.

Kate Lin, CAIA 05 August, 2021 | 11:14
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In July, the overall MPF market was diverging, with a 0.32% median return among 474 MPFs.

Regulatory shake-ups have made 2021 quite an eventful period for the Chinese stock market so far. As a result, Morningstar China Index fell 13.7%, sacrificing all the year-to-date gain and ending up with a 12.4% loss. In the MPF arena, the China & Greater China Equity category lost 9.3% while Hong Kong Equity group dropped 8.8%. Active managers did better in China and Greater China Equity funds versus ETFs but the outperformance is far narrower as compared to that earned in 2020. 

 

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Winners

Meanwhile, global, U.S. and Europe Equity Funds posted another strong month. These three categories took all top 25 spots for July performance and were the winners from January to July 2021.

Over the past month, investors fretted over the Delta variant of COVID-19, and this increased equity market volatility. Though, it did not deter major U.S. stock indices from reaching new highs toward the end of July, mainly helped by mega-cap tech firms and overall positive corporate earnings. After the rally, the 12 U.S. equity MPFs gained a monthly return of 2.74% and a year-to-date return of 16.6% on average.

MPF contributors who invest in Europe, U.S. and Global equity funds gained 13.7%, 16.6% and 11.1% so far this year, respectively.

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About Author

Kate Lin, CAIA

Kate Lin, CAIA  is a Data Journalist for Morningstar Asia, and is based in Hong Kong

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