Hedge fund Prudence shuns China property, likes utilities, consumers

HONG KONG Nov 2 (Reuters) - China's property sector credit will offer fewer opportunities after last year's spectacular gains and investors should switch to consumer-driven plays as the world's second-largest economy turns to consumption from investment as its key driver, hedge fund Prudence Investment Management said.

Sectors such as utilities, resources and consumer goods would provide much more stable cash flows compared with property, where squeezed borrowers are unlikely to feel any significant relief from an expected easing in Beijing's monetary policy.

"I see the property sector as consuming too much resources and not productive enough," said Yuan Wang, who co-founded Hong Kong-based Prudence Investment in 2008.

"Even if credit eases a bit in China, it's not going to benefit the property sector," said Wang, who earlier worked as a scientist at a company in the United States.

Wang's $250 million China-focused credit hedge fund, Prudence Enhanced Income, has returned 193 percent since its launch in January 2009 to the end of October 2011.

Last month, it gained 4 percent to erase its entire year-to-date loss. The fund, which has increased assets from $30 million at launch, is up 0.16 percent in 2011. (Editing by Chris Lewis)