HONG KONG, Sep 24 (Reuters) The investment management arm of Dutch financial service group ING Groep NV is set to launch a new China fund it hopes will raise at least 0 million and round out its product offerings in the region.
The ING China Access Fund will be a concentrated portfolio of 30 to 40 stocks of China-focused firms listed on international exchanges, targeting Hong Kong's retail investors and private banking clients in the region, ING executives said on Monday. China Enterprises index of H-shares, or Hong Kong-listed shares in mainland companies, closed at an all-time high on record volumes.
But company officials said China's booming economic growth, the prospect of investment flows from mainland China, and the likelihood of continued yuan appreciation point to further gains.
''The renminbi is basically underwriting returns in China over the next ten years, because you're going to get 5 percent per annum, or thereabout,'' Christopher Ryan, chief executive of ING Investment Management Asia Pacific, told a media briefing.
''It's clear the time is good for something like this,'' he added.
ING's Asia Pacific fund arm had more than 5 billion in assets under management at the end of June, making it one of the region's largest fund houses.
''This fund, initially if we got in the 0 million range we'd be pleased, over the next six to 12 months. But I would expect the fund to be much larger than that,'' Ryan said.
The fund will be managed by Michael Chiu, who also runs the ING (L) Invest Greater China fund. That fund rose 54.09 percent in the year to June 29, compared with a 43.91 percent rise in the MSCI Golden Dragon index over the same period, ING said.
Chiu said he was overweight financial stocks, particularly property firms, within his existing portfolios, as well as energy producers, which he expects to see solid long-term demand, and restructuring plays such as airlines.
But he was bearish on the prospects for the ''labour intensive, low value added export sector'' given the potential for yuan appreciation and a slowing U.S. economy.
The Hong Kong-based manager, who estimated the MSCI China index trades at about 18 to 19 times 2008 earnings, said he still thought valuations were reasonable given China's high economic growth.
''Chinese companies continue to deliver positive earnings surprises to investors. And this is the reason why, despite relatively high valuations compared with two years ago, people are still willing to buy Chinese stocks,'' he said.
REUTERS SR KN1855