HFT Investment Buying China Insurance, Consumer Stocks After Rate Increase

HFT Investment Management Co., part- owned by a BNP Paribas SA unit, is buying Chinese insurance, consumer and health-care stocks, betting they’ll gain as incomes rise and after China boosted interest rates.

“Looking at the market for the next five to 12 months, we prefer those three sectors,” Chief Executive Officer Tian Rencan, who oversees about $13 billion of assets at the Shanghai-based company, said in an interview in Seoul. “They’re already in our portfolios and the weighting could go up,” he said, declining to be more specific.

China’s central bank unexpectedly lifted the benchmark one- year lending rate to 5.56 percent from 5.31 percent on Oct. 19, the first increase since 2007, to try to prevent an asset bubble after China surpassed Japan in the second quarter as the world’s second-largest economy. China’s benchmark stock index fell 0.7 percent from a six-month high yesterday after economic growth slowed and inflation accelerated in September to the fastest pace in 23 months.

Gross domestic product grew 9.6 percent in the third quarter, the smallest gain in a year, while consumer prices rose 3.6 percent last month, the statistics bureau said yesterday.

China Life Insurance Co., the nation’s biggest insurer, has jumped 29 percent this month, outpacing a 12 percent rally by the benchmark Shanghai Composite Index. Ping An Insurance (Group) Co., China’s second-largest insurer, has advanced 24 percent.

Investment Returns

Life insurers will benefit in a rising rate environment from improved investment returns and increased flexibility to price products, Ivan Cheung, a Hong Kong-based analyst at Mirae Asset Securities, wrote in a report this week.

Kweichow Moutai Co., China’s biggest baijiu liquor producer by market value, rose to the highest since December this month, while Shandong Dong-E E-Jiao Co., a traditional Chinese herbal medicine maker, surged 80 percent this year.

HFT Investment, a venture between BNP Paribas Investment Partners and Haitong Securities Co., China’s second-biggest brokerage by market value, plans to boost its workforce by 10 percent next year, according to Tian.

The company, which has 80 percent of assets in equities, opened its first overseas unit in Hong Kong to serve international customers, said Tian, who is visiting Seoul to speak at a conference and meet clients.

To contact the reporter on this story: Jungmin Hong in Seoul at jhong47@bloomberg.net

To contact the editor responsible for this story: Will McSheehy at wmcsheehy@bloomberg.net

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