China’s top-performing macro fund is betting against one of the primary drivers of the nation’s economy: Consumption. Lu Jun, whose Congrong Allweather Fund returned 91 percent last year, says wage gains will slow abruptly as early as the second quarter as companies struggle with falling profits. That’s going to hit consumption and may result in retail-sales growth more than halving to 5 percent by the end of 2016, he said, citing his company’s own calculations. Lu said he’s keeping stock exposure low and has “fully hedged” all such holdings with short positions in equity-index futures, while declining to mention any specific securities. He’s also holding “a lot of cash” and money-market securities as he’s bracing for further declines in the stock market amid slowing growth. “We’ll just wait and see, till the storm passes,” Lu said. (VIEW LINK)
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