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china fund news reporter wu juanjuan

"crazy week", foreign investors' sentiment towards the chinese market has reversed. who is buying?

goldman sachs prime brokerage data shows that "nimble" overseas hedge funds took the lead this week. after sorting through the data and conducting interviews with multiple parties, the reporter found that in addition to hedge funds, passive funds were also buying quickly.

etf net inflows hit multi-year high in one day

data from etf.com shows that many u.s.-listed chinese etfs have set record single-day net inflows in the past week.

for example, kweb, the largest china etf listed in the united states, tracks the internet index and includes china’s internet leaders. as of september 26, the etf size was $5.03 billion. on september 26, kweb received a net inflow of us$378 million, setting a single-day net inflow record in more than three years. prior to this, on august 23, 2021, kweb received a net inflow of us$515 million, which was the largest single-day net inflow of funds since kweb was established.

source: etf.com

on september 26, the political bureau of the central committee held a meeting to analyze and study the current economic situation and deploy the next economic work. the reporter learned that many overseas investors were deeply impressed by the statements made at the politburo meeting and invested heavily in buying chinese assets. in terms of target selection, an overseas seller said that in the early stages of the market rebound, overseas investors tend to buy "beta", and etfs are tools for gaining beta exposure.

source: etf.com.

in addition to kweb, other chinese stock etfs also received significant net inflows on september 26. for example, fxi, which tracks the ftse china 50 index, received a net inflow of us$44 million on september 26, reversing the continued net outflow of funds in the past few months. ashr, which tracks the csi 300 index, received a net inflow of us$174 million on september 26, the largest record in more than two years. on june 23, 2022, ashr received a net inflow of us$183 million.

some investors also took profits after the sharp rise. for example, yinn, which was three times long on the ftse china 50 index, experienced a net outflow of us$47.8 million on september 25. as of september 27, the etf has increased by 53.32% in the past five days.

as of september 26, there are five chinese etfs listed in the united states with a scale of more than us$1 billion, namely kweb tracking the internet index, mchi tracking the msci china index, fxi tracking the ftse china 50 index, and the csi 300 index. ashr and three times long the ftse china 50 yinn.

options linked to overseas china etfs also show that overseas bullish sentiment has picked up. for example, open interest in call options tied to fxi has increased by 61.2% over the past five days. over the same period, open interest in put options tied to fxi fell by 1.5%. at the same time, options’ implied volatility has risen sharply.

trading funds took the lead in inflows

last week, a hong kong private equity partner was on a business trip in the middle east. she told reporters that after the politburo meeting, overseas investors' interest in china picked up significantly and they asked many questions. however, “you can’t expect them to come up with money right away”, at least “the road show is a lot more confident,” she said. a source from the market department of another large u.s. asset management institution said that chinese stocks accounted for seven of the 10 best-rising stocks in the company's global stock pool in the past week.

liu gang, strategy analyst and managing director of cicc research departmentrecording what i learned from this week’s roadshow in the uk. liu gang wrote: "the positions of long-term clients in european stocks are mainly based on consumption growth, which is also an area favored by foreign investors. during consumption growth, they particularly prefer internet e-commerce."

have european clients added to their positions after the recent market rebound? according to liu gang's understanding, some customers have indeed increased their positions. however, given that long stock funds are currently significantly underweighting china, their increased positions are mostly to reduce the extent of underweighting and avoid significantly underperforming the benchmark. in his view, long-term stock bull funds are not the main force driving this round of rises.

he combined the latest data from epfr, a global capital flow tracking agency, to infer that the current overseas incremental funds are mainly hedge funds and trading funds. in the short term, the power of hedge funds and trading funds cannot be underestimated. however, its sustainability is questionable, and it is likely to go as quickly as it came.

europe's largest asset management institution: optimistic about consumer staples and securities firms

september 27, amundi, europe's largest asset management institutionpublished a report stating that after the introduction of relevant policies, it is cautiously optimistic about chinese assets. chinese stocks, including a-shares and some hong kong stocks, will benefit from policy changes, and stock investors will have good opportunities. the real estate market is stabilizing and residents' expectations for the economy or income are improving, which may provide further boost to stocks. amundi said it is optimistic about consumer staples and some financial stocks including brokerages.

amundi also recommended that investors reduce their short positions in the rmb and become neutral on the rmb. the reason is that after the introduction of fiscal measures, market expectations for growth and inflation have increased, which will help stabilize the rmb exchange rate. however, considering that the us election is approaching, the risk of a new round of tariffs is still worthy of attention.

amundi believes that the market has responded positively to the stimulus measures introduced this week. whether the optimistic mood can be maintained depends on whether a strong fiscal stimulus plan is launched. if relevant parties introduce consumer-oriented fiscal stimulus measures, amundi expects china's economic growth and inflation expectations in 2025 to be revised upwards.