MARKET REPORT: Chinese cold fuels withdraw from trusts

Investors who had hoped to boost returns by buying China-focused funds were upset yesterday.

Soured relations between Beijing and London, combined with brutal new restrictions on profits for education companies operating in China, have wiped out masses of inventories.

And the 18 London-listed investment trusts targeting China or the wider Asia-Pacific region were a sea of ​​red as savers pulled their money out.

Shares in Fidelity China Special Situations, a £1.8 billion industry titan, fell 3.6 percent or 13.5 pence to 357.5 pence. Second-largest rival JP Morgan Emerging Markets fell 1.2 percent, or 1.6 pence, to 130.2 pence, and Schroder Asia Pacific fell 1.3 percent, or 8p, to 593p.

Problem: Deteriorating relations between Beijing and London, combined with brutal new restrictions on profits for education companies operating in China, have wiped out many stocks

JP Morgan China Growth & Income was one of the hardest hit, dropping 5.1 percent or 31p to 580p. The Chinese regulators are stepping up and restricting companies that appear to be becoming westernized.

The final step was to ban education companies from making a profit, in the hope that this would encourage families to have children by making it cheaper to educate them.

And reports that the UK wants to remove Chinese energy company CGN from its nuclear projects, suggesting a widening gap between the two countries, has been of little help to sentiment.

It was a dull day for the UK’s FTSE 100, which remained virtually flat at 7025.43 points.

Miners boosted the index, supported by strong metal prices – Antofagasta climbed 4.1 percent, or 58.5p, to 1495.5p, Glencore rose 3.3 percent, or 10.5p, to 326.2 points, Anglo American rose 3.2 percent, or 94.5p, to 3058.5p and Rio Tinto rose 3.1 percent, or 184p, to 6110p. But those gains were offset by the strengthening pound, which weighs on the performance of companies that sell many of their products abroad. For example, Unilever, owner of Dove-to-Hellmann, fell 2.7 percent, or 113p, to 4031p.

The more domestically focused FTSE 250 rose 0.2 percent, or 49.8 points, to 22,933.2 points, helped by news that UK Covid cases had fallen for the sixth day in a row. This boosted leisure and travel stocks – Cineworld rose 5.4 percent, or 3.44p, to 66.84p, Trainline climbed 5.2 percent, or 16p, to 322.6p, and Easyjet rose 3.9 percent, or 32p, up to 845.8p.

Meat producer Cranswick was supported by the strongly growing export to Asia and the rising value of British pigs. Export sales from the Far East in the three months to the end of June were ‘far ahead’ of the same period last year, when China was in lockdown. And it increased capacity at its poultry site in Eye, Suffolk, from 1.1 million to 1.4 million birds per week. Shares rose 2.5 percent, or 98p, to 4100p.

Elsewhere, newly listed private equity firm Bridgepoint celebrated its first trading day with further gains.

The company, famed for building Pret a Manger into one of the country’s largest cafe chains, floated on the market last week but could only be traded by institutions until yesterday. The shares rose 3.2 percent, or 15.6p, to 499.6p, up 43 percent from their share price of 350p.

Trying to drag its company into the digital age amid competition from the likes of Amazon Prime and Disney Plus, ITV announced it had spent £2.5m to buy a minority stake in Live Tech Games. The company makes mobile games that allow users to play against each other live. Shares of ITV rose 0.2 percent or 0.25 pence to 121.25 pence.

The float boom in London is set to continue today as Southern Energy Corp is expected to announce that it will be listed on the junior exchange AIM. The oil and gas company is valued at around £20 million and has operations in Mississippi and Alabama, and already trades in Toronto but wants to tap into the UK to fund deals.

Some links in this article may be affiliate links. If you click on it, we can earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.