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recently, global funds have become increasingly enthusiastic about pursuing chinese assets.

on october 2, the a-share csi 500 index listed on the japan exchange surged 77.8%.in the u.s. stock market, the 3-time long ftse china etf-direxion rose 21.81%, and the 2-time long csi 300 etf-direxion rose 15.23%.on tuesday local time, the kraneshares china internet etf received an inflow of us$700 million, setting a record for the largest single-day inflow.

in addition, chinese etfs in markets such as europe, india, thailand, and the middle east have all seen surges recently.

some us stock investors said: "i just sold pinduoduo and jd.com, and now this is the hottest thing in the world."

some hedge funds even shouted that investors "you don’t even need to pick stocks now”, which “had previously reduced its net exposure to china through arbitrage strategies, but has now turned long again. "

looking ahead to the market outlook, foreign investment institutions continue to be bullish. dalio, founder of bridgewater associates, posted on linkedin on monday:considering that chinese assets are still very cheap, multiple factors have ignited the "animal spirit" in the market, and a large number of investors have entered the market to hunt for dips.

chinese assets around the world are rising sharply. investors: chinese stocks are the hottest thing in the world.

on october 2, the a-share csi 500 index listed on the japan exchange closed up 77.8% at 6,399 points.

the a-share southern china securities 500 index has surged 77.8% in recent days (as of october 2, beijing time). image source: yahoo finance

in the u.s. stock market, the performance of etfs tracking chinese assets was particularly strong. on october 2 (wednesday) eastern time, the 3x long ftse china etf-direxion rose 21.81%, and the 2x long csi 300 etf-direxion rose 15.23%. . tuesday, local time (october 1),the kraneshares csi china internet etf received an inflow of us$700 million, setting a record for the largest single-day inflow.

foreign equity exchange-traded funds (etfs) focused on chinese stocks received $2.4 billion in inflows in the last three trading days of september, data from the london stock exchange (lseg) showed, which was in line with the year-to-date period through september 25. the $2.7 billion in outflows during the period was in stark contrast.

in other markets, china-related etfs are highly sought after by investors. in the etf ranking of investment platform alpha seeking,china-related etfs took the 2nd, 3rd, and 4th place.

italy's ubs msci china a sf ucits etf has surged 27.23% in recent days (as of october 2, beijing time). image source: tradingview

india's nippon india etf hang seng bee has surged 28.16% in recent days (as of october 2, beijing time). image source: tradingview

thailand’s wise ktam csi 300 china has surged 19.81% in recent days (as of october 2, beijing time). image source: tradingview

the uae chimera s&p china hk shariah etf has surged 26.72% in recent days (as of october 2, beijing time). image source: tradingview

the british kraneshares icav csi china internet ucits etf usd has surged 28.86% in recent days (as of october 2, beijing time). image source: tradingview

germany's china a research enhanced index equity (esg) ucits etf usd has surged 26.11% in recent days (as of october 2, beijing time). image source: tradingview

on october 3, market observers said,funds that previously left the chinese stock market and moved to japanese and southeast asian stock markets are about to return. stock markets in south korea, indonesia, malaysia and thailand saw net outflows last week; bnp paribas said that more than us$20 billion had been withdrawn from the japanese stock market in the first three weeks of september. eric yee, senior portfolio manager at atlantis investment management in singapore, said that it is reducing its long positions in asia to provide funds for buying chinese stocks.

on foreign social media and forums, many netizens and traders called the chinese stock market a miracle. some netizens vividly described the rapid rise of china’s stock market: “it's like an f1 car accelerating from 0 to 100 mph in one second.”

image source:x

there are also u.s. stock investors who regret it: "i just sold pinduoduo and jd.com, and now it is the hottest thing in the world."

image source:x

another netizen said that his investment portfolio's year-to-date return has reached 48% after the surge in chinese stocks. he found that the chinese market is really significantly undervalued.

image source:x

hedge fund ceo: investor"you don’t even need to pick stocks now”

with the surge in china’s stock market since late september,some hedge funds betting on the chinese market also posted sharp gains in september.bloomberg quoted people familiar with the matter as saying that triata capital's china fund surged 44% last month, blue creek's china fund rose an estimated 31%, yunqi capital's china fund rose 26%, and other funds made up for losses earlier this year. loss.

"the sudden policy shift in september gave chinese funds very welcome beta-driven outsized returns.we believe the future environment is conducive to the implementation of an alpha-focused strategy in china. "

people familiar with the matter cited by bloomberg said yunqi investment, founded by investor chris wang, has bought large shares of u.s.-listed chinese companies that have been raising dividends and reaching out to investors to boost their stock prices. the surge in chinese stocks helped hedge fund blue creek erase earlier losses in its china fund, bringing the fund's gain this year to 15%. joseph zhang xiaogang, founder of the hedge fund with $133 million in assets under management, said he has been optimistic about the chinese market over the past year and plans to continue investing across the board.

goldman sachs group inc's hedge fund clients recorded the most net purchases of chinese stocks in a single week since its prime brokerage arm began tracking such data in 2016.the bank said in a sept. 30 report that its china-focused fundamental stock-picking hedge fund clients returned an average of 6% last week, the best weekly performance on record.

billionaire investor david tepper is adding to his holdings of "everything" related to china, while blackrock, the world's largest asset manager, has also become overweight chinese stocks. hedge funds are rushing to build bullish positions in china's stock market in order to profit from the surge in china's stock market.benefiting from the reversal in market sentiment, these hedge funds' bullish bets on china far outnumbered their bearish bets.

multi-strategy hedge fund gao capital is also buying large chinese blue-chip stocks. the company’s ceo chauwei yak believes that investors “you don’t even need to pick stocks now”, which “had previously reduced its net exposure to china through arbitrage strategies, but has now turned long again. "

dalio: this past week will go down in history

benefiting from recent strong gains, chinese stocks (including a-shares, h-shares and overseas-listed chinese stocks) regained the weight they had lost in emerging market indexes over the past 10 months in less than 10 trading days before the national day holiday.

data compiled by bloomberg show that since the federal reserve cut interest rates on september 18, local time,the market value of chinese stocks has increased significantly by us$3.2 trillion (approximately 22.52 trillion yuan). as of the end of september this year, the weight of chinese stocks in the msci emerging markets benchmark index rose to 27.8%, a new high since november 2023.

the weight of chinese stocks in the msci emerging markets index has increased significantly recently (image source: bloomberg)

sylvia sheng, global multi-asset strategist at j.p. morgan asset management, wrote in a client note: "we are more optimistic about china's economic outlook shifting to positive signals from the chinese government and regulators, as well as their increasing focus on supporting economic growth and stability. measures taken by the real estate industry should help provide bottom support for market prices and promote the upward momentum of the stock market.”

in response to the recent surge in chinese assets, dalio, founder of bridgewater associates, posted on linkedin on monday:a series of policy shifts last week are an important step toward stimulating creative productivity. considering that chinese assets are still very cheap, multiple factors have ignited the "animal spirit" in the market, and a large number of investors have entered the market to hunt for dips.

"this is an important week. in fact, i think this week is so important that it may go down in the history of market economics. as long as policymakers take the necessary actions, which will ultimately require far more than what is announced." daly ou wrote.

image source: screenshot of dalio’s linkedin post

billy leung, investment strategist at global

gabriel sacks, emerging markets portfolio manager at standard life (abrdn), which manages around £506bn of assets, said, “overall, we think the upside (for the chinese market) is greater than the downside.sacks said the institution "selectively" bought chinese stocks last week and will wait for the chinese government to introduce more detailed policy plans.

ling vey-sern, managing director of union bancaire privee in singapore, said: "interest in chinese assets is definitely picking up, and clients have a lot of questions about whether to continue chasing chinese assets. the market sentiment towards china has shifted, and stocks valuations may return to historical averages, and even after the big rally, there is still significant upside.”