Caifinance News October 18th (Editor Malan) The strong rally in the Chinese stock market in late September has filled overseas investors with optimistic expectations. Bridgewater, a globally renowned hedge fund, saw its domestic China fund's return rate climb to 31% in the first three quarters of this year, further reinforcing Bridgewater's bullish outlook on the Chinese market.

In its third-quarter investor letter, Bridgewater emphasized that despite the rebound in the Chinese stock market, its stock prices are still relatively low compared to profit outlook. It will continue to moderately increase its holdings in Chinese stocks, go long on ​bonds, and maintain a neutral stance on csi commodity equity index.

Bridgewater stated that China's massive stimulus plan significantly increased investors' risk appetite; secondly, the Fed's interest rate cuts have improved global liquidity, increasing the attractiveness of risk assets.

It further added that although it is not yet clear whether strong fiscal support will accompany China's stimulus measures to sustain the recovery of the Chinese market, it is expected that China's overall policy environment will remain accommodative, which is relatively favorable for risk assets.

Buy, buy, buy.

Earlier this year, Bridgewater's asset management scale in China increased to over 40 billion RMB (approximately $5.6 billion). Its all-weather strategy achieved a return rate of 19% in September, and the return rate for the first nine months of this year reached 31%.

Due to the continued favorable policy outlook, Bridgewater also mentioned its moderate long position in short-term bonds. The fund plans to increase its long-term debt exposure, pointing out that despite the market having already priced in expectations of future tightening in the bond market policies over the next few years, Bridgewater Fund still sees investment opportunities.

Lars Naeckter, Head of Stock Derivatives Research in the Asia-Pacific region at Bank of America, also pointed out that since China announced a series of measures to revitalize the economy, there has been an increased demand for bullish bets.

He added that for Chinese stocks listed in Hong Kong and the exchange-traded funds (ETFs) tracking these stocks on American exchanges, the cost of call options relative to put options has approached the highest level since 2008.

Principal Asset Management, an American asset management company, also stated that China is taking meaningful measures to revitalize the economy, leading to an increase in investor confidence. They also mentioned that they are increasing their shareholding in Chinese stocks, both indirectly through Hong Kong and directly in China.

Steve Larson, Global Equity Portfolio Manager at Principal Asset Management, emphasized on Thursday that their view of the Chinese market has shifted from skepticism to a more optimistic outlook.

Editor/ping