① Goldman Sachs's latest report indicates that global hedge funds have increased their holdings of Chinese stocks for four consecutive weeks, and have poured into the Chinese market for seven out of the past eight weeks; ② lower-valued stocks have created an excellent opportunity to enter the market, and Dalio of Qiaosui has long revealed that he has been investing in China; ③ Goldman Sachs and many other Wall Street institutions believe that the bull market for Chinese stocks will continue.
Financial Services Association, May 22 — As one of the signs of a shift in global capital flows, Goldman Sachs recently reported that overseas hedge funds have increased their holdings of Chinese stocks for the fourth consecutive week.
According to a Goldman Sachs Group report, in the past eight weeks, overseas hedge funds have bought Chinese stocks in seven weeks. On Monday, Goldman Sachs also raised the target prices for the MSCI China Index and the Shanghai and Shenzhen 300 Index, an increase of nearly 5%.
Of course, there is more evidence that overseas capital is betting on Chinese stocks. According to Choice data, as of May 20, Northbound Capital had net purchases for 4 consecutive months since February. The total net purchase amount this year reached 93.181 billion yuan, exceeding the net purchase amount for the full year of 2022 and 2023, showing that global capital is enthusiastic about allocating to the Chinese market.
Among them, Wall Street players who are betting that the Chinese market is about to turn the clouds include famous big bear Michael Burry and billionaire investor David Tepper's asset management company Appaloosa. Another financial giant, Dalio of Qiaosui, said in March that Chinese stocks are cheap, and he has maintained his investment in Chinese assets.
Then play music, then dance
Since this year, the Shanghai and Shenzhen 300 Index has risen 7.4%. Meanwhile, Hong Kong's Hang Seng Index surged 15%.
Andrea Cicione, head of research at GlobalData TS Lombard, wrote in a report last Friday that the valuation of Chinese stocks is currently roughly in line with the pre-COVID-19 average. As the hot Southeast Asian market is nearing the end of profits, Chinese stocks with relatively low prices are clearly very attractive.
He 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 this, judging that the bull market for Chinese stocks will continue.
Goldman Sachs said in its latest research that the probability of the Chinese stock market entering a technical bull market is 60%, and the average potential maximum return for the next six months is 35%.
Goldman Sachs analysts emphasized that the potential upside for the MSCI China Index over the next 12 months is 25%, 8%, and -13%, respectively, under bull, benchmark, and bear scenarios, which means that the risk-return ratio of the Chinese market looks good even if there are political risks.
Goldman Sachs said that compared with a few years ago, the sensitivity of Chinese stocks to the bilateral situation between China and the US has weakened. This is mainly because the market has a better understanding and pricing of these risks, which explains why Chinese stocks have maintained a strong momentum after the US government announced the new tariff policy last week.
edit/emily