China's new leaders will boost growth.
Relying on this forecast, Mizuho Asset Management Co. is opening a China fund.
The firm is bucking a trend that has seen domestic companies such as United Investments Co., Sumitomo Mitsui Asset Management Co. and SBI Asset Management Co. cancel China funds as the clash over the Japan-controlled Senkaku islets has soured bilateral relations.
The MHAM China Growth Focus Fund, which starts Nov. 30, will focus on industries that would benefit from railway, health care and financial reforms by Beijing, said fund manager Masahiko Ejiri.
Possible target stocks include Citic Securities Co., Sinopharm Group Co. and other pharmaceutical firms, according to Ejiri. Consumer and Internet companies, including Tencent Holdings Ltd. and U.S.-listed Baidu Inc., are also candidates, he added.
"Fund performance isn't really impacted by the tension between Japan and China," Ejiri said. "Our concern is whether we can raise money because of Japanese investor sentiment toward China. When demand for A-share funds comes back, there won't be many competitors providing such an opportunity to investors."
Communist Party delegates are meeting in Beijing over several days to choose a fifth generation of leaders since it seized power in 1949.
Mizuho Asset Management's fund will include Chinese companies listed on the mainland, Hong Kong and other venues, as well as exchange-traded funds denominated in yuan and Hong Kong dollars, Ejiri said. The unit oversees about $45 billion, including Hong Kong-listed equities.
Airlines and gold-related companies may also be added as a short-term strategy betting on global liquidity, Ejiri said.
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