①The recent bullish trend in Chinese stocks has not only attracted the attention of numerous Wall Street giants, but also a rare phenomenon has appeared in the Japanese stock market: a rush to acquire Chinese assets. ②On the other hand, the so-called "smart money" hedge funds are also aggressively pouring into China.
After the Chinese government introduced a series of bullish policies, Chinese stocks are "firing on all cylinders". $CSI 300 Index (000300.SH)$ Last week, there was a cumulative increase of 15.7%, marking the strongest weekly performance since November 2008. The Hang Seng H-Share Index in Hong Kong has risen for 11 consecutive trading days, setting the longest uptrend record since 2018.
With the arrival of the National Day holiday this week, although A shares have closed, the Hong Kong stock market is still "boiling." As of the close of trading on Tuesday, Hong Kong $Hang Seng Index (800000.HK)$posted a 6.2% increase.$Hang Seng TECH Index (800700.HK)$Rose by 8.53%. China-affiliated brokerage and mainland real estate stocks all surged:$RONSHINECHINA (03301.HK)$Increased by over 397%,$AGILE GROUP (03383.HK)$Increased by over 160%,$SHIMAO GROUP (00813.HK)$Increased by over 153%; $CMSC (06099.HK)$ Rising over 81%, $CITIC SEC (06030.HK)$ Rising over 39%, $SWHY (06806.HK)$ Rising over 33%.
This wave of rising Chinese stocks not only received attention from numerous Wall Street tycoons, but also witnessed a rare phenomenon in the Japanese stock market: a rush to acquire Chinese assets. It is reported that A-shares listed on the Japanese exchange $One ETF Southern China A-Share CSI 500 (2553.JP)$ closed today with a 77.8% increase, at 6399 points.
In addition, listed on the Hong Kong Stock Exchange $CSOP CSI 300 Index Daily (2x) Leveraged Product (07233.HK)$ rose more than 35%, $CSOP Hang Seng Index Daily (2x) Leveraged Product (07200.HK)$ rose more than 12.3%.
Meanwhile, Japanese stocks fell significantly.$Nikkei 225 (.N225.JP)$The index closed down 2.18% to 37,808.76 points on Wednesday. The Tokyo Stock Exchange index closed down 1.4% to 2651.96 points. Some analysts suggest that investors in the Japanese and Korean markets may feel nervous due to the performance of A-shares, choosing to reduce their stock holdings and invest in Chinese assets instead.
On the other hand, hedge funds, also known as "smart money," are pouring into China like crazy.
Goldman Sachs' latest report shows that driven by the far-exceeding expectations of the Chinese government's stimulus measures, global hedge funds have flocked to the Chinese stock market, leading to the strongest weekly bid on record last week (September 23-27).
According to the Goldman Sachs report, hedge funds have "sharply" accelerated their allocation of Chinese assets, with the weekly purchases of Chinese stocks from September 23 to 27 reaching the highest level recorded by the bank since 2016.
Based on the above report, the fund inflow is mainly long positions, especially long positions in individual stocks, with bids mainly concentrated in the consumer, industrial, financial, and information technology sectors. Energy is the only sector where hedge funds have slightly reduced their positions.
Furthermore, the sharp rebound in the Chinese stock market helped stock-picking hedge funds focused on the Chinese market achieve a 6% return rate last week, marking the best single-week performance for Goldman Sachs on record. The estimated return rate for these hedge funds so far this year is 12.8%.
It is worth noting that not only hedge funds and speculators, many long-term foreign investors are now concerned about missing out on opportunities. According to data from LSEG, foreign stock exchange-traded funds (ETFs) focused on Chinese stocks received a $2.4 billion inflow in the last three trading days of September, sharply contrasting with the $2.7 billion outflow from the beginning of the year to September 25.
Investors and analysts are saying that although reducing shareholding in Chinese stocks has been the biggest consensus trade in recent years amidst dim economic prospects and geopolitical tensions, the tide is now turning.
Wee Khoon Chong, Senior Market Strategist for the Asia-Pacific region at Bank of New York Mellon, said, 'We see a significant rise in interest in buying Chinese stocks as we approach the long National Day holiday in China.' This is encouraging and indicates a possible shift in sentiment towards China among global investors after a long period of capital outflows.
Editor/Rocky