MARKET REPORT: Chinese chill fuels retreat from trusts

Investors who had hoped to boost their returns by buying into China-focused funds were left smarting yesterday. 

Souring relations between Beijing and London, combined with brutal new restrictions on profits for education companies operating in China, have knocked swathes of stocks. 

And the 18 investment trusts listed in London which focus on 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 titan of the sector at £1.8billion, slid 3.6 per cent, or 13.5p, to 357.5p. Its next-largest rival JP Morgan Emerging Markets fell by 1.2 per cent, or 1.6p, to 130.2p, and Schroder Asia Pacific edged down 1.3 per cent, or 8p, to 593p. 

Trouble: Souring relations between Beijing and London, combined with brutal new restrictions on profits for education companies operating in China, have knocked swathes of stocks

JP Morgan China Growth & Income was one of the worst affected, falling 5.1 per cent, or 31p, to 580p. China’s regulators are cracking down, imposing restrictions on businesses which are seen to be becoming Westernised. 

The latest move was to ban education firms from making a profit, in the hope this would encourage families to have children by making it cheaper to raise them. 

And reports that the UK is looking to remove Chinese energy company CGN from its nuclear power projects, hinting at a widening divide between the two countries, have done little to buoy sentiment. 

It was a dull day for Britain’s FTSE 100, which remained near-flat at 7025.43 points. 

Miners gave a boost to the index, lifted by strong metals prices – Antofagasta climbed 4.1 per cent, or 58.5p, to 1495.5p, Glencore was up 3.3 per cent, or 10.5p, to 326.2 points, Anglo American edged up 3.2 per cent, or 94.5p, to 3058.5p and Rio Tinto rose 3.1 per cent, or 184p, to 6110p. But those gains were countered by the stronger pound, which weighs on the performance of companies which sell a lot of their products overseas. Dove-to-Hellmann’s owner Unilever, for example, slipped 2.7 per cent, or 113p, to 4031p. 

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

Meat producer Cranswick was buoyed by booming exports to Asia and the rising value of UK pigs. Far East export sales in the three months to the end of June were ‘well ahead’ of the same period of last year when China was in lockdown. And it increased the capacity at its poultry site in Eye, Suffolk, from 1.1m to 1.4m birds per week. Shares rose 2.5 per cent or 98p, to 4100p. 

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

The firm, famous for building Pret a Manger into one of the country’s biggest cafe chains, floated last week but could only be traded by institutions until yesterday. Its shares lifted 3.2 per cent, or 15.6p, to 499.6p, up 43 per cent from their float price of 350p. 

ITV, which is trying to haul its business into the digital age amid competition from the likes of Amazon Prime and Disney Plus, announced it had spent £2.5m buying a minority stake in Live Tech Games. The company creates mobile games allowing users to play against each other live. ITV’s shares nudged up 0.2 per cent, or 0.25p, to 121.25p. 

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