Source: Wall Street See

The recent strong rebound in the Chinese stock market is causing a major shift in the sentiment of overseas investors. Overseas hedge funds are pouring into the Chinese stock market at a record pace, and overseas large investors are also gradually "moving away from a wait-and-see attitude", preparing to bet on China again.

Investors "don't even need to pick stocks now"

Under a series of bullish policy stimuli, the Chinese stock market has recently experienced a strong rebound. The sse composite index rose by 17.39% in September, the shenzhen component index rose by 26.13%, and the gem rose by 37.62%, marking a historical single-month increase. As for Hong Kong stocks, the hang seng index rose by 17.48% in September, the hang seng tech index rose by 33.45%, and the hang seng china enterprises index rose by 18.62%.

The strong market performance combined with strong stimulus expectations is quietly changing the attitudes of overseas investors towards the Chinese stock market, with overseas hedge funds pouring in.

According to Bloomberg interviews and research, the hedge fund Mount Lucas Management from the USA has established a bullish position in China ETFs, while GAO Capital from Singapore and Timefolio Asset Management from South Korea are buying Chinese blue-chip stocks. Tribeca Investment Partners headquartered in Sydney is buying Australian mining companies and other stocks related to China.

David Aspell, Chief Investment Officer of Mount Lucas, stated that many investors who had long been away from the Chinese market are now returning, betting that the Chinese stock market will bottom out and rebound strongly before the economic recovery. He himself is betting on the rebound of consumer stocks like JD.com through tools such as call options spreads.

Chauwei Yak, CEO of GAO Capital, believes that investors "don't even need to choose stocks now", as they "previously reduced net exposure in China through arbitrage strategies, but have now switched to long positions."

Large overseas institutions are preparing to return to China.

Large overseas investment institutions are also preparing to return to China.

According to Reuters, large investors believe that measures taken to attract more funds into the stock market and stimulate consumer spending are increasing the attractiveness of undervalued Chinese companies.

Gabriel Sacks, Emerging Markets Portfolio Manager at Abrdn, stated that the company "selectively" purchased Chinese stocks last week and is awaiting more detailed fiscal stimulus plans. "Overall, the upside potential in the (Chinese market) is greater than the downside potential." As a well-known financial company based in Edinburgh, Abrdn manages approximately 506 billion pounds (677 billion dollars) in assets.

Natasha Ebtehadj, Fund Manager at Artemis Fund Managers, believes that there is a "significant disconnect between the undervaluation of Chinese stocks and the improving policy narrative." She has increased her holdings in Chinese stocks and established some new positions.

Luca Paolini, Chief Strategist at Pictet Asset Management (with assets of 260 billion dollars), suggests that investors may be overlooking the prospects of US rate cuts stimulating global demand and Chinese exports. "What we've been telling clients this week is that if you don't have anything in China, you may need to increase your exposure."

Noel O'Halloran, Chief Investment Officer at KBI Global Investors, summarily states, "Regarding the allocation to China, for many it may be too early to change the allocation, but I think there is only one direction, and that is up."

Editor/Corrine