Monetary easing from the People’s Bank of China (PBoC) has added liquidity, a condition investors often correlate with stronger share price performance. “Government intervention has played a central role in restoring investor confidence. In late 2024, China introduced its largest stimulus since Covid-19, with further substantial fiscal support announced that could be deployed in 2026 or sooner,” says Yeo, who is the firm’s head of investment, CIO office and portfolio manager, Fullerton China Equities.
Alongside this, Beijing’s regulatory clean-up emphasises stability, transparency and fairness in the capital markets — a framing that has resonated with global allocators seeking diversification rather than index mirroring.
Valuation is another anchor. “Chinese equities are trading at inexpensive valuations relative to other global markets, despite a similar earnings growth outlook. This makes Chinese stocks compelling, offering a ‘safety margin’ for investors to capture the potential higher future returns,” says Yeo. Export competitiveness remains intact thanks to a low real exchange rate and cost deflation, helping sectors like IT, retail, materials and industrials defend margins even as trade frictions ebb and flow.
Policy priorities also dovetail with equity themes, as China’s industrial strategy is funnelling support into higher value-added manufacturing, automation and R&D. Beneficiaries include AI, IT and communications — areas where domestic champions are gaining share. This has sharpened investor focus on companies with durable moats, governance discipline and the ability to generate and compound cash flows through cycles, rather than on short-term top-down trades.
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Fullerton Fund Management’s China team frames the 12-month setup as constructive: improving consumption, robust industrial production and a policy stance aimed at stabilising and supporting key sectors. The combination of macro stabilisation and bottom-up stock selection, they argue, is widening the opportunity set across both onshore A-shares and Hong Kong listings.
Chinese equities tend to have low correlation with global equities. Over the five years ended June 2025, the correlation between the MSCI World (global equities) and China A-shares (MSCI China A) is 0.22. By comparison, the correlation between the MSCI World and MSCI China All-shares (which includes various Chinese share classes beyond A-shares) is higher, at 0.32.
China equities focus
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Against this backdrop, Fullerton Fund Management, alongside GROW with Singlife, has launched the Fullerton Lux Funds-China Equities (Class A) SGD, offering Singapore-based investors SGD-denominated access to China A-shares and Hong Kong names via a benchmark-agnostic, bottom-up strategy.
The fund seeks long-term capital appreciation, prioritising company fundamentals over market trends. It provides exposure to areas such as consumer goods, manufacturing and communication services while keeping sector positioning flexible rather than index-bound. The portfolio is intended to be high-conviction and lower-volatility, built stock by stock on a margin-of-safety discipline and governance quality.
“The fund seeks to discover remarkable companies and to understand their long-term intrinsic value. We look for companies that exhibit the following traits: companies with strong competitive moats, sound governance structure, and that are steady compounders,” says Yeo.
A key differentiator is the sub-advisory role of Da Cheng International Asset Management, the offshore arm of one of the mainland’s “old ten” fund houses. Da Cheng is among only four equity managers approved by China’s National Council for Social Security Fund and currently manages 16 social security pension portfolios across the mainland and overseas. It has won multiple accolades, including the Golden Bull Fund Award and “Top Ten Star Fund Company” recognition, signalling standing and depth in China’s market microstructure.
“The China Equities fund in partnership with Fullerton is a compelling proposition to enhance overall portfolio diversification and participate in China’s long-term growth story,” says Tim Wong, head of product at GROW with Singlife.
“It’s a solution that aligns with our strategy of offering investment options that are progressive, innovative and relevant to advisers and their clients. With improving market sentiment, we also see this as an opportune time for investors to capitalise on the growth of one of the world’s most dynamic economies,” he adds.
Mark Yuen, chief business development officer at Fullerton Fund Management, says previous successful collaborations between Fullerton and GROW have demonstrated a shared commitment to deliver innovative and high-performing investment solutions. “The Fullerton Lux Fund – China Equities is one such offering, giving investors access to China’s growth story through a high-conviction strategy. Complemented by Da Cheng’s deep understanding of China’s markets, we are confident this fund has the potential to deliver compelling financial outcomes for investors.”
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The IPO for the SGD share class ran until Aug 22 at $10.00 per unit with a minimum investment of $200. Units have been tradable at prevailing NAV since Aug 25. Access to the SGD share class is currently via GROW’s platform and adviser network.
Fullerton says the fund’s breadth — spanning both onshore A-shares and Hong Kong H-shares — widens the idea pipeline versus single-market strategies, keeping allocations driven by stock-level conviction rather than targets for each share class. “We manage a high-conviction, concentrated portfolio of 30–50 companies that we deem to be amongst the best in their industries,” says Yeo. “These companies typically have strong competitive moats, such as scale and cost advantages, deep client stickiness and technology leadership.”
Operationally, the partnership is intended to channel onshore expertise to offshore investors. Da Cheng conducts broad research coverage with a team of 30 analysts and 20 portfolio managers, and provides model portfolio recommendations that Fullerton reviews and implements within fund guidelines. The two teams communicate frequently, and Fullerton may also incorporate selected Da Cheng ideas into other Asian strategies where permitted — a process designed to marry local insight with Fullerton’s risk and compliance guardrails.
Fullerton further notes that the new fund aims to align with Da Cheng’s onshore Gao Xin Ji Shu strategy, which it describes as a high-conviction approach focused on sustainable long-term value and competitive advantages. The onshore strategy is soft-closed at capacity; the SGD share class offers a route to a similar profile for international investors within Fullerton’s structure.
Active discipline
Volatility is part of China’s market plumbing, with daily swings that can reach 5% on busy days. Yeo says: “We seek to invest for the long term by remaining focused on the underlying fundamentals of individual companies. We tend to avoid companies with high valuations and invest when there is sufficient margin of safety. Coupled with a disciplined portfolio construction approach, we expect our portfolio to remain relatively resilient to volatility risks.”
For allocators, the team suggests treating China as a strategic sleeve rather than a trade, given low correlations and distinct growth drivers including domestic consumption, innovation and expanding global share in areas such as consumer health, household appliances, manufacturing equipment and green energy. Sizing should reflect risk tolerance, horizon and objectives, with active management and onshore partnerships helping to navigate market microstructure and policy cadence.
The macro case echoes the launch narrative. Yeo cites a 5% GDP growth projection for 2025 and a policy stance that continues to support market stability and priority sectors, even as global volatility persists this year. That combination, she argues, is drawing investors who want diversification and a clearer line of sight to long-term return drivers rather than near-term policy headlines.
From a risk standpoint, the manager reiterates that liquidity support, governance reforms and valuation discounts relative to history and peers tilt risk-reward more favourably than in recent years. Yeo says: “Given the volatility of China’s market, an active management approach with a focus on bottom-up stock selection and local expertise can help generate alpha and navigate market swings. Partnerships with established local managers (such as Da Cheng) bring deep onshore insight.”
Other portfolio construction best practices that Yeo highlights include qualitative best practices to suggest sizing allocation based on investor risk tolerance, investment horizon and portfolio objectives; as well as long-term orientation, recognising China’s ongoing transformation and ambitions for innovation-driven growth.
“Chinese equities can be considered as a strategic allocation within global or Asian equity portfolios for their diversification benefits, unique growth potential, and currently attractive valuations. Allocations should be tailored to investor objectives and risk profiles, preferably utilising active management and local expertise to navigate market inefficiencies and capture long-term value,” says Yeo.
