China funds cut equity allocations; Fed rate hike remains a risk: Reuters poll

[March 31, 2016]  SHANGHAI (Reuters) - Chinese fund managers slightly reduced their suggested equity exposure for the next three months to 71.3 percent from 71.9 percent a month earlier, as the market remains wary of the timing of the next U.S. interest rate rise, a Reuters poll showed.

The poll of eight fund managers conducted last week recommended an increase in bond allocations to 12.5 percent from 10.6 percent a month ago.

They recommended reducing cash holdings to 16.3 percent from 17.5 percent earlier.

"The market is likely to swing around the current position in the short term," said a fund manager in Southern China. "But soon-to-be-released economic data and the prospect of a Fed interest rate hike could cause major movements."

The Federal Reserve Chair Janet Yellen said on Tuesday that the U.S. central bank should proceed only cautiously as it looks to raise interest rates.

The fund managers suggested higher exposure to infrastructure, transportation and machinery stocks but cut their recommended weightings for consumer stocks.

Seven fund managers forecasted on average that the Shanghai Composite Index would be around 2985.7 points, higher than the forecast made last month. Two fund managers expected the index would fall to 2,500 while three predicted that it would exceed 3,300 points.

(Reporting by Beijing bureau; Editing by Simon Cameron-Moore)

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