A Chinese stock fund has surged ahead of 97% of its competitors this year by focusing on low-valued state-owned enterprises (SOEs), reflecting a calculated shift toward overlooked segments of the market. With valuations of state firms significantly lagging private sector counterparts, the fund’s strategy highlights potential in sectors tied closely to government reforms.
The fund’s performance comes amid efforts by Beijing to boost state-owned enterprises, aligning with recent policies to increase efficiency and profitability. While investors often favor private companies for growth potential, SOEs present opportunities for value-oriented funds willing to navigate the challenges. This approach not only diversifies risk but also positions the fund to capitalize on government-driven economic initiatives.
By identifying inefficiencies and targeting long-term value in state-controlled firms, the fund’s strategy provides a compelling narrative amid broader market uncertainties.
