“We are seeing a change in the stance of foreign investors, which is a positive signal for Chinese stocks,” said Dong Zhongyun, an analyst at Avic Securities. “It's worth keeping an eye on investment flows northward.” [through the Stock Connects]This is because new capital can be generated and shake up the market. ”
Foreign investors continue to increase their holdings in banks and food and beverage companies, while reducing exposure to computer-related stocks, Sinolink Securities said, without disclosing specific names.
HSBC Holdings said in a report this month that offshore hedge funds and overseas long-only funds have led inflows since late January, but it remains to be seen whether the returns are tactical or strategic. said. He said he expects more overseas buying going forward due to weak valuations, weak positioning of Chinese stocks, and the prospect of further economic stimulus.
A multitrillion-dollar rebound sparks debate: Is the worst over for Chinese stocks?
A multitrillion-dollar rebound sparks debate: Is the worst over for Chinese stocks?
According to Capital Securities, soaring valuations in the U.S., Europe and Japan markets have made Chinese stocks more attractive, but slowing economic growth and rising geopolitical risks have made them temporarily unpopular with foreign investors. It had become.
According to Bloomberg data, the CSI 300 has a forward P/E ratio of 13 times, while the Nikkei Stock Average has a forward P/E ratio of 23.6 times. The S&P 500 has a multiple of 21.6x and Europe's Stoxx 50 index has a multiple of 14.3x.
“Recently, we have seen an increase in bullish reports on Chinese assets by foreign investment banks,” said Wang Shijin, an analyst at Capital Securities. “With excessive gains in other major markets such as the US and Japan, Chinese assets could become part of the 'barbell trade' employed by foreign hedge funds.”
China's 'broker dismantler' regulator to foster mainland investment banks
China's 'broker dismantler' regulator to foster mainland investment banks
Barbell trading is a strategy often employed in fixed income trading and refers to a more balanced tactic of adding lower-risk assets to a portfolio to hedge and reduce risk.
HSBC strategist Gerard van der Linde said Chinese stocks were set to benefit from Japan's lifting of negative interest rates this month, a move that would change the flow of funds in Asia and push some funds away. may return to China.
“Sentiment is changing,” van der Linde said. “Portfolio allocations to China are increasing as the market begins to appreciate the positive news on earnings. We remain overweight in Chinese stocks.”
