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the surge in a-shares has made citigroup "crazy", and the hedge boss shouted: buy all china-related assets

2024-09-29

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how much has your stock account increased this week?

this week, the csi 300 index rose 15.7%, its best performance since november 2008. under the profit-making effect, investors rushed to enter the market. citigroup said in a research report, "the past three days have been the busiest period for the team, and the number of clients inflowing into hong kong stocks and a-shares has reached a record high."

at the same time, some investment tycoons have quickly moved to buy chinese assets. well-known hedge fund boss david tepper called out to "buy all china-related assets." he bluntly said that even after this round of gains, the valuation of chinese stocks is still very low.

in addition, under the rising market sentiment, some investors are even worried that they will miss the continuous rise during the coming holidays.

let’s see what foreign-funded institutions have to say?

crazy busy! this is probably the most intuitive feeling of the citi asia team in recent days.

according to foreign media reports, as the people's bank of china, the china securities regulatory commission, the state administration of financial supervision and other departments have recently joined forces to send a "big gift package" to china's capital market, a large number of customers have also flocked to citigroup's asian stock sales and trading team. citigroup said in a research report, "the past three days have been the busiest period for the team, and the number of clients entering hong kong stocks and a-shares has reached a record high."

a package of good news has led to a full-scale explosion of chinese assets, including a-shares and offshore markets, in recent days.

image source: every warp drawing

this week, the csi 300 index rose 15.7%, its best performance since november 2008. foreign investors are also aggressively long chinese assets. well-known hedge fund boss david tepper even shouted "buy all china-related assets." he bluntly said that even after this round of gains, the valuation of chinese stocks is still very low.

foreign investment institutions have also become increasingly optimistic about the outlook for chinese assets, including amundi, goldman sachs and fidelity, which have successively updated their investment strategies. vincent mortier, chief investment officer of amundi asset management group, told the "daily economic news" reporter, "the stabilization of the real estate market, coupled with the improvement of household expectations, may further boost the chinese stock market."

the attitude of foreign capital has changed, well-known investor tepper:

buy all china related assets

under the countercyclical policies that have exceeded expectations continuously, investors are increasing their investment in chinese assets. citi said the past three days have been "the busiest period for citi's equity sales and trading teams in asia, with the number of clients inflowing into hong kong and a-shares hitting a record high."

data compiled by bloomberg also show that the xtrackers harvest csi 300 etf (ashr), which tracks china’s a-shares, received a net inflow of more than $173 million on september 25, a new high since june 2022.

data from goldman sachs' prime brokerage department shows that hedge funds also changed direction earlier this week and poured into the chinese stock market. on september 27, they recorded the largest single-day net buying volume since march 2021 and the largest single-day net buying volume in the past 10 years. the second largest single-day net buying volume. prior to this, less than 7% of their capital was allocated to chinese stocks, about the lowest level in five years.

vincent mortier, chief investment officer of amundi asset management group, also pointed out in an interview with a reporter from "daily economic news", "as far as we know, global hedge funds have limited exposure to chinese assets, and cautious hedge funds are likely to have covering short positions. long-term/short-term equity hedge funds that mainly focus on asia and china have average exposure to chinese stocks before the announcement of stimulus policies. they are biased towards offshore indexes and consumer, technology and financial stocks in terms of industries. they significantly increased their investment in chinese stocks this week.”

some investment tycoons have quickly moved to buy chinese assets. on september 26, local time, david tepper, the american billionaire investor and founder of appaloosa management company, said in an interview with cnbc’s “squawk box” tv program that he is buying everything related to china. assets, including futures, stocks, etfs, etc.

he explained that chinese stock valuations remained low even after their share prices soared, and he also lifted restrictions on chinese stocks. "i probably said a long time ago that i wouldn't go above 10% or 15%. that may not be the case anymore," tepper said.

helen jewell, chief information officer for basic equities in europe, the middle east and africa at blackrock, believes that the chinese stock market has hit bottom and stock valuations are also very low. currently, more people are indeed adding chinese stocks to their investment portfolios.

foreign-funded institutions frequently “speak out”

update investment strategy

in response to the multiple stimulus policies introduced by china and the content of major conferences, a number of foreign investment banks have successively stated that the stimulus measures are a major benefit to the stock market and recommend tactical investment in chinese stocks.

some market observers have also noticed that amid the rising market sentiment, some investors are even worried about missing out on consecutive gains during the upcoming holidays.

amundi: it is recommended to reduce the short position of the yuan to neutral

vincent mortier, chief investment officer of amundi asset management group, told reporters that from an investment perspective, he believes that chinese stocks, especially a-shares and some hong kong stocks, will benefit the most from recent policy changes, with profit yields and the wide gap between bond yields presents an attractive opportunity for equity investors.

"in addition, the stabilization of the real estate market, coupled with improved household expectations, may further boost the chinese stock market." he further pointed out.

regarding investment direction, he said, "we are particularly optimistic about consumer staples and financial stocks, especially brokerages and asset management companies, which will benefit from increased market activity. at the same time, we recommend reducing the short position in the yuan to neutral, because speculation about rising economic growth and inflation continues to rise after the announcement of fiscal measures, which will stabilize the yuan exchange rate."

standard chartered bank: loose policies will help reduce growth risks

ding shuang, chief economist of greater china and north asia at standard chartered bank and director of the china chief economists forum, told the daily economic news reporter that the more aggressive easing policies of the people’s bank of china will help reduce growth risks.

"although we earlier stated that there are downside risks to the 4.8% gdp growth forecast in 2024, we believe that the measures announced on the 24th will moderately reduce financing costs and give homeowners more room to spend, improve stock market sentiment, thereby reducing downside risks. an upward trend could emerge if the government takes additional fiscal measures to stimulate demand, although the impact is likely to be felt early next year.”

goldman sachs: bigger impetus will come from passive investors

scott rubner, managing director of global markets and tactical expert at goldman sachs group, said on september 26 that china’s stock market has been strong in recent times and should become an important part of investors’ investment plans once the u.s. election is over. he believes that the long-awaited recovery of china's stock market may finally arrive, writing, "i really think this time is different for china."

he believes that more funds will flow into chinese assets in the future. in addition to hedge funds, mutual funds also have significant buying potential. rubner wrote in a report sent to clients that as of the end of august this year, global mutual funds' global allocation ratio to chinese assets was 5.1%, a historically low level.

rubner said the bigger push will come from passive investors, as data shows that of the $695 billion in inflows into u.s.-listed exchange-traded funds (etfs) in 2024, only $4.9 billion went to chinese etfs.

invesco asset: china’s stock market still has 20% room for growth

david chao, a strategist at invesco asset management, said, "investors' fear of missing out (fomo) is rising as chinese stocks have risen nearly 10% in the past three days."

he believes the rally in china's stock market is likely to continue. "based on historical valuations, we believe there is still 20% room for growth in the chinese stock market." he mentioned, "the chinese market is momentum-centered, and i think the current rise is somewhat similar to the rise from 2014 to 2015. "the shanghai composite index rose about 150% between june 2014 and june 2015, but then fell.

david chao also added that as the u.s. dollar continues to weaken on the back of the federal reserve's interest rate cuts, he expects "there may be a rotation away from expensive and crowded global technology trades and into cheaper emerging market assets."

fidelity international: defensive industries such as banks and utilities are more resilient

zhu lei, head of asia fixed income investment at fidelity international, believes that chinese policymakers are committed to improving investor confidence, including unifying the minimum down payment ratio for mortgage loans, further cutting interest rates, and promising to increase stock market liquidity, which will have a positive boost to the market.

she told the reporter of "daily economic news" that "the long-term interest rate, which is still positive after adjustment for inflation, is at a low level, which will drive the continued improvement of china's bond market. in the stock market, the stimulus policy that exceeds expectations has brought benefits to the market. , defensive industries such as banks and utilities are more resilient.”