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Visible Hands: Professional Asset Managers’ Expectations and the Stock Market in China

Author

Listed:
  • Ammer, John
  • Rogers, John
  • Wang, Gang
  • Yu, Yang

Abstract

We study how professional fund managers’ growth expectations affect their equity investments and the consequent effects on prices. Using novel data on China’s mutual fund managers’ growth expectations, we show that pessimistic managers decrease equity allocations and shift away from more cyclical stocks. We identify a statistically significant link between managers’ growth expectations and returns on the stocks that they hold and trade. We also find that an earnings-based measure of price informativeness is increasing in forecasting managers’ investment and forecast-consistent trading, implying that active fund managers in China help move stock prices closer to underlying fundamentals.

Suggested Citation

  • Ammer, John & Rogers, John & Wang, Gang & Yu, Yang, 2025. "Visible Hands: Professional Asset Managers’ Expectations and the Stock Market in China," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 60(5), pages 2469-2499, August.
    • Handle: RePEc:cup:jfinqa:v:60:y:2025:i:5:p:2469-2499_12
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    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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