Recent strong performance of Chinese assets has triggered a significant shift in sentiment among overseas investors, with foreign hedge funds pouring into the Chinese stock market at a record pace. Large overseas investors are also gradually moving away from a wait-and-see attitude, preparing to bet on China again.
According to Bloomberg data, as of the week ending October 4th, the five major ETFs investing in Chinese stocks attracted over $6 billion in inflows, reaching an unprecedented scale.
$iShares China Large-Cap ETF (FXI.US)$ Last week saw the largest net inflow of funds, reaching $3.5 billion.
$KraneShares CSI China Internet ETF (KWEB.US)$ Exceeding $1.4 billion in inflows.
$Direxion Daily FTSE China Bull 3X Shares ETF (YINN.US)$Please use your Futubull account to access the feature.$iShares MSCI China ETF (MCHI.US)$Please use your Futubull account to access the feature.$Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR.US)$ Raising over $0.8 billion, $0.3 billion, and $0.1 billion respectively.
The data shows that overnight funds continue to heavily increase their positions. $iShares China Large-Cap ETF (FXI.US)$Please use your Futubull account to access the feature.$KraneShares CSI China Internet ETF (KWEB.US)$ Added positions of 0.1 billion dollars, 30.88 million dollars respectively.
Although these ETFs saw a sharp decline in pre-market trading, the significant inflow of funds recently reflects strong bullish sentiment in overseas markets.
Short-term options costs for China-related ETFs in the US market also climbed to new highs on Monday, showing investors' strong bullish sentiment towards the Chinese market. Some large traders are also rolling profit positions to higher prices, hoping to increase their profits as the uptrend continues.
For example, with a size of $2.3 billion, $Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR.US)$ One-month optionsImplied volatilityrose to a historic high, while the scale reached 9.3 billion dollars $iShares China Large-Cap ETF (FXI.US)$ The same indicator has also reached its highest level since 2020, with a scale of 8.36 billion US dollars. $KraneShares CSI China Internet ETF (KWEB.US)$ The touched a two-year high.
According to China's First Finance, a senior Wall Street investment banker stated that under the recent series of policies in China, the asset siphon effect in China is accelerating, with large sums of capital from the Indian market flowing into Chinese assets.
The individual also mentioned that the Chinese stock market has recently experienced the largest scale increase since 2008, becoming a crucial indicator closely watched by global capital. More and more American traders are closely monitoring the night sessions of the Chinese stock market, as well as the trends in the Hong Kong stock market during China's National Day holidays, in order not to miss out on the rising opportunities.
However, despite the predominance of optimistic sentiment, there are also signs indicating that some investors who are taking precautionary measures are establishing protective measures to deal with the risk of the bullish trend fading.$Direxion Daily FTSE China Bear 3X Shares ETF (YANG.US)$ Last week, received buy-in of over 0.2 billion, funds increased positions by approximately 36.96 million USD yesterday.
Is it possible to take advantage of the pullback opportunity to get on board?
Today, both Hong Kong stocks and Chinese assets listed in the US experienced a pullback.
Many investors are currently most concerned about whether Hong Kong stocks and Chinese assets listed in the US can regain momentum after a sharp adjustment.
Zhang Yidong, Chief Global Strategy Analyst of Industrial Securities, said that whether it is A-shares or Hong Kong stocks, it is not just about hitting a bottom and rebounding; it may be a more optimistic reversal logic. A preliminary judgment about A-shares after the holiday is "three bigs" - big rise, big fluctuations, big differentiation. The historical mission of the bull market has been completed, and it is necessary to slow down the pace, and applaud for the volatility.
Everbright Securities' International Strategist Wu Lixian stated that the significant drop in Hong Kong stocks indicates a focus on A-share performance in the market. Looking at the cumulative gains of Hong Kong stocks over the past few weeks, the current pullback degree is relatively reasonable, given the significant overbought conditions in the past, and this correction serves as a partial correction to the overbought indicators.technical indicatorsEverbright Securities' International Strategist Wu Lixian stated that the significant drop in Hong Kong stocks indicates a focus on A-share performance in the market. Looking at the cumulative gains of Hong Kong stocks over the past few weeks, the current pullback degree is relatively reasonable, given the significant overbought conditions in the past, and this correction serves as a partial correction to the overbought indicators.
In its report released on October 6, JPMorgan wrote that after the A-shares market opened, Hong Kong-listed real estate, consumer, and financial stocks may experience a pullback, but this is healthy.
Macquarie, the Australian investment bank, also released a report today pointing out the upside potential of Chinese internet-related stocks. Compared with the beginning of 2023, the fundamentals of Chinese internet-related stocks are now stronger, but the valuation level has only been half of that at the beginning of 2023. Macquarie analysts have raised the valuations of several stocks to align with the outlook for the 2025 fiscal year:
Macquarie will $BABA-W (09988.HK)$ and $PDD Holdings (PDD.US)$ rating upgraded from 'Neutral' to 'Outperform large cap'; reiterated $JD.com (JD.US)$Please use your Futubull account to access the feature.$MEITUAN-W (03690.HK)$ and $DiDi Global Inc (DIDIY.US)$ Rating of 'outperforming the benchmark'.
Editor/Somer