[foreign investors are bullish]
JPMorgan Chase Liu Ming dysprosium: overall bullish on Chinese stock market since October last year, but this factor is the key.
UBS: the cash era is over and there is a big chance for these assets!
[China's assets are good]
Chinese assets ushered in a lot of good news!
The return of funds to China assets QDII fund premium has fallen sharply.
Foreign-funded institutions continue to be optimistic about China's bond market, and the pace of increasing positions is steady.
Foreign investors are buying up Chinese assets.
Overseas hedge funds have increased their holdings of Chinese stocks for the fourth consecutive week, Goldman Sachs said in its latest report. Last week, China recorded the largest capital inflows among emerging market countries, reaching 4%, according to data from Bloomberg.Kemplasticplayingcards.88 billion US dollars (about 3.5 billion yuan).
In terms of northbound funds, on May 22, the net inflow of northbound funds was 47.KemplasticplayingcardsThe net purchase amount during the year increased to 95.99 billion yuan, exceeding the annual net purchase amount in 2022 and 2023. There are signs that global enthusiasm for the allocation of Chinese assets is accelerating.
Standing at the present time, investors may be more concerned about the continuation of this round of market.Kemplasticplayingcards? Will foreign investors continue to bet on Chinese assets? Andrea Cicione, head of research at GlobalData TS Lombard, wrote in the latest report that Chinese stocks with relatively low valuations are still attractive and that the momentum for investors to return to Chinese stocks has increased and is likely to continueKemplasticplayingcardsAnalysts at Alpine Macro, a global macro research firm, also said that the Chinese stock market would continue to rise further after a strong rebound over the past two months, citing improved economic conditions against the backdrop of more government stimulus measures.
The periphery is heavy
Overseas hedge funds have increased their holdings of Chinese stocks for the fourth consecutive week, Goldman Sachs said in its latest report.
Hedge funds have bought Chinese stocks in seven of the past eight weeks, according to the Goldman Sachs brokerage team. But the report did not disclose the exact amount of the purchase.
Last week, China recorded the largest capital inflows among emerging market countries, with $488 million, of which $289.6 million went to iShares MSCI China ETF, according to Bloomberg data.
Brendan McKenna, emerging markets foreign exchange strategist at Wells Fargo, said the reason for buying Chinese stocks every week was growing optimism that Beijing would do more to support the economy.
In fact, data from northward capital can also be found that foreign capital continues to net inflow into the A-share market.
According to Wind data, the net inflow of northbound capital reached 4.776 billion yuan on May 22nd, and the net inflow increased to 21.746 billion yuan in a single month, marking the fourth consecutive month of net purchases since February. From the perspective of the annual dimension, the cumulative net purchase amount during the year has reached 95.99 billion yuan, exceeding the annual net purchase amount in 2022 and 2023.
Another sign of foreign bets on Chinese assets is that a number of Wall Street bosses have increased their allocation of Chinese assets at low levels. These include Michael Burry, the famous short seller, and Appaloosa, the management company of billionaire investor David Tepper.
With the increased allocation of funds to Chinese stocks, A shares, Hong Kong stocks and US-listed Chinese stocks staged a big counterattack.
On May 22, the A-share market fluctuated in a narrow range, and the three major indexes collectively received dividends, of which the Prev index closed up 0.02%, the Shenzhen Composite Index rose 0.12%, and the gem index closed up 0.88%. So far this year, the Shanghai index has risen 6.2 per cent, the CSI 300 index has risen 7.4 per cent, and Hong Kong's Hang Seng index has soared 12.7 per cent.
How can I get there in the future?
Standing at the current point of time, investors may be more concerned about whether this round of market can continue. Will foreign investors continue to bet on Chinese assets?
Andrea Cicione, head of research at GlobalData TS Lombard, wrote in the latest report that current valuations of Chinese stocks are roughly in line with COVID-19 's pre-epidemic average. Given that hot Southeast Asian markets are nearing profit-taking, relatively low-priced Chinese stocks remain attractive.
He further pointed out that the momentum for investors to return to Chinese stocks has increased and is likely to continue. Earlier, LPL Financial strategist Adam Turnquist also said that the bull market in Chinese stocks will continue.
Analysts at Alpine Macro, a global macro research firm, also wrote in a report that China's stock market will continue to rise further after a strong rebound over the past two months, citing improved economic conditions against the backdrop of more government stimulus measures.
In addition, Goldman Sachs said in its latest research that the probability of the Chinese stock market entering a technical bull market is 60%, with an average potential maximum return of 35% over the next six months.
Analysts at Goldman Sachs stressed that the potential upside for the MSCI China index over the next 12 months was 25 per cent, 8 per cent and-13 per cent, respectively, under bull, benchmark and bear market scenarios.
Compared with a few years ago, Chinese stocks are less sensitive to the bilateral situation between China and the United States, mainly because the market has a better understanding and pricing of these risks, Goldman Sachs said. this explains why Chinese stocks remained strong after the US government announced new tariffs last week.
Goldman Sachs raised its 12-month target for the MSCI China Index from 60 to 70 and the CSI 300 from 3900 to 4100, maintaining an "overweight" rating on mainland A shares.
The property market also sends a good signal.
Analysts at Alpine Macro said China's announcement of increased property support marked a sharp shift in the country's stance in response to the downturn in the property market and reflected its attitude of "doing whatever it takes" to prevent further weakness in the property market.
Since the end of April, there have been continuous favorable policies from the central to local governments, especially in mid-May, with the reduction of the down payment ratio, the abolition of the floor of interest rates, and the reduction of provident fund interest rates. The current housing loan policy has been more relaxed than in 2016.
Alpine Macro analysts said in a report that the big shift in housing policy will help reduce financial pressure on developers and provide a bottom line for their asset prices.
In fact, judging from the current market situation, the increase in the favorable policy of the property market has indeed strengthened the market confidence in the short term. According to CRIC monitoring, the transaction area of commercial housing in 65 key cities across the country in the 20th week of 2024 was 3.3089 million square meters, which was basically the same as that in the 19th week, and increased by 17% compared with the average of April 2024.
Among them, the repair situation of the third and fourth lines is better than that of the first and second lines, and the transaction volume of 40 third and fourth lines in the past week has been significantly better than the weekly average level in March this year.
Kerui Research stated in its latest report that from the perspective of project visits and subscriptions, market activity in many places has steadily increased, and key cities can be divided into the following categories:
First, market transactions in Shanghai, Chengdu, Xi'an, etc., where hot spots are constantly hot, have stopped falling in the past week. Due to the concentrated promotion of Internet celebrity listings in core areas, the market popularity has remained high.
Second, in cities where market popularity has rebounded significantly in the short term, with Shenzhen and Wuhan as typical representatives, the overall transaction volume has been significantly better than the weekly average level in the second half of last year. Typical representatives such as Shenzhen have frequent hot sales of good news and accelerated shipments of new products.
Third, the number of visits to projects in most cities such as Beijing, Hangzhou, Nanjing, Suzhou, Hefei, Zhengzhou and other cities has steadily increased, and market activity has increased, but it has not yet been reflected in the transaction side.
Reflecting on the market level, on May 22, the real estate chain broke out again, and real estate services, property management, real estate development, building decoration and other sectors collectively rose sharply. Among them, Vanke A's turnover reached 6.822 billion yuan, ranking first in the entire market; the intraday high rose nearly 8%. Since April 25, it has rebounded from its low point by more than 50%.
In addition, the leader of the real estate services sector-I Love My Home-has seen a cumulative increase of nearly 140% since April 25.
China Post Securities said that it is optimistic about the valuation repair during the policy window in the next few months, but whether it can last will ultimately depend on whether the subsequent fundamentals support it.