Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

The strong rebound of the Chinese stock market has brought substantial returns to some hedge funds, with some funds achieving over 25% returns in September. This growth is attributed to a series of stimulus measures introduced by the Chinese government to boost the economy, including lowering banks' reserve requirement ratios and adjusting mortgage loan rates. The implementation of these policies, coupled with the optimistic sentiment towards Chinese stocks in the market, propelled the MSCI China Index to rise by 23% in September, marking the largest increase since November 2022.

Specifically, Triata Capital's China Fund surged by 44% last month, Blue Creek's fund is estimated to have risen by 31%, and Yunqi Capital's fund increased by 26%. The strong performance of these funds not only erased the losses earlier this year but also provided much-needed relief for hedge funds focused on the Chinese market.

Billionaire investor David Tepper mentioned that he is buying more China-related assets, while hedge funds are vying to build positions to benefit from the stock market rebound. Last week, Goldman Sachs' hedge fund clients made record net purchases of Chinese stocks, marking the largest weekly net inflow since 2016. The bank's report also highlighted that its China-focused fundamental stock selection hedge funds' average return rate was at 6% last week, marking the best weekly performance on record.

Nicolas Amstutz, partner at Lotus Peak Capital, stated that the sudden policy shift has brought excess beta returns to China funds, and it is expected that the future environment will favor China strategies focused on alpha.

According to sources, Triata Capital, managing around $0.77 billion in assets, is currently focusing on investing in stocks with strong fundamentals, high growth potential, sufficient cash balance, and low valuations. In September, the fund achieved strong returns from artificial intelligence software and data center-related stocks.

Another source mentioned that Chris Wang, the founder of Yunqi Capital, heavily purchased shares of oversold U.S.-listed Chinese companies, which aimed to boost stock prices by raising dividends and collaborating with investors, such as Lufax Holdings Limited and Qufu Technology.

Representatives from Triata and Cloudstart Capital declined to comment.

The rise in the stock market also helped Blue Creek offset previous losses, with this year's profit reaching 15%. This hedge fund, with a size of 0.133 billion US dollars, has been bullish on the Chinese market over the past year and plans to continue investing heavily, said founder Joseph Zhang Xiaogang.

Zhang Xiaogang stated: 'The valuation of the Chinese market is still very cheap.' He pointed out that global investors hold very deep-rooted negative views on China and its economy, which will take some time to change this bias. He added that due to the soft real estate market leading to an economic slowdown, the Chinese government has more policy tools to support its economy.

Another hedge fund, Pinpoint China Fund, achieved close to a 12% ROI in September, according to informed sources, boosting the fund's profit for this year to 18%.

However, not all funds have seen huge profits. For example, the WT China Fund is known for its strict balance of call and put options, with a 1.7% increase in September and a 21% increase so far this year. In addition, Zhao Chen, Chief Global Strategist at Montreal Investment Research firm Alpine Macro, stated that it is too early to determine whether September's rebound is one of many false rebounds seen since the beginning of the Chinese bear market in early 2022.

Nevertheless, Zhao Chen also pointed out that in the backdrop of extensive share buybacks and a competitive industry profit recovery, the expected returns of Chinese stocks in the MSCI index have stopped declining. Many negative news has already been absorbed by the market, with Chinese stocks trading 60% lower than their US counterparts and 40% lower than European stocks.

Zhao Chen remarked: 'Of course, there is nothing to guarantee that increased profits and undervaluation will immediately lead Chinese stocks to outperform the large caps.' He mentioned that the world has changed, with escalating geopolitical tensions. 'We can only say that in the long term, Chinese stocks may represent a value investment.'

Editor / jayden