Source: Securities Times Network
Author: Zhou Le
At a critical moment, major foreign investment firms have made their latest statements.
During the overnight session on the U.S. stock market (August 13), Chinese stocks rebounded, and as of the market close,$NASDAQ Golden Dragon China (.HXC.US)$Surging over 3%.$Direxion Daily FTSE China Bull 3X Shares ETF (YINN.US)$Surging over 8%,$Direxion Daily CSI China Internet Index Bull 2x Shares ETF (CWEB.US)$surging over 7%,$Alibaba (BABA.US)$、$JD.com (JD.US)$Surging over 4%. During the Asian trading session on the 13th, UBS Group released its latest report pointing out that against the backdrop of rising trade policy uncertainty, investors are likely to buy Chinese stocks on dips if the sell-off intensifies.
During the Asian trading session on the 13th, China's A-share and Hong Kong stock markets also rebounded after bottoming out.$Chinext Price Index (399006.SZ)$、$Hang Seng TECH Index (800700.HK)$The markets once fell more than 4% during trading, but rebounded collectively in the afternoon, with declines narrowing significantly. By the close, the ChiNext Index was down 1.11%, and the Hang Seng Tech Index fell 1.82%.
Meanwhile, multiple brokerage firms stated that in the short term, the rise in external uncertainties is suppressing market risk appetite. However, the impact of this shock may be far lower than the level seen in April this year. From a medium- to long-term perspective, the core drivers of this round of market performance have not changed, and adjustments within a slow bull trend could present opportunities to accumulate positions on pullbacks.
Chinese stocks listed in the U.S. surged
On the evening of October 13th Beijing time, after the opening of the U.S. stock market, Chinese assets launched a full-scale rally. By the close,$NASDAQ Golden Dragon China (.HXC.US)$surged 3.21%,$Direxion Daily FTSE China Bull 3X Shares ETF (YINN.US)$surged 8.71%,$Direxion Daily CSI China Internet Index Bull 2x Shares ETF (CWEB.US)$surged 7.39%. The two-times leveraged CSI 300 ETF surged 6.11%, and the China Technology ETF rose over 4%. Popular U.S.-listed Chinese stocks generally posted gains,$21Vianet (VNET.US)$surged over 10%,$Pony AI (PONY.US)$rose more than 9%, and$NIO Inc (NIO.US)$rose by 7%, $MINISO (MNSO.US)$Up more than 5%, Alibaba and JD.com up over 4%,$XPeng (XPEV.US)$、$Baidu (BIDU.US)$、$Tencent Music (TME.US)$gained over 3%.
During the Asian trading session on the 13th, both the A-share and Hong Kong stock markets experienced a broad-based adjustment. The Shanghai Composite Index once fell by more than 2%, while the ChiNext Index plummeted over 4%. The Hang Seng Tech Index also dropped nearly 5% at one point. However, after rebounding in the afternoon, the declines of major indices significantly narrowed. By the close, the Shanghai Composite Index was down 0.19%, and the ChiNext Index fell 1.11%.$Hang Seng Index (800000.HK)$Dropped by 1.52%,$Hang Seng TECH Index (800700.HK)$The decline narrowed to 1.82%.
At this juncture, the question investors are most concerned about is undoubtedly how Chinese assets will perform going forward?
Li Lifeng, Deputy Director of the Research Institute at Huaxi Securities and Chief Analyst for strategy and policy, stated in a research report that the short-term escalation of trade frictions is bound to lead to increased volatility in the capital markets. However, based on the 'learning effect' of the capital markets and the strengthening of China's market stabilization mechanisms, the impact of this shock may be far less severe than the level seen in April this year.
Liu Chenming, Chief Strategy Analyst at GF Securities, believes that this is most likely another typical 'TACO trade.' Historically, short-term declines have provided good buying opportunities. The difference between the current market environment and that of April is that the domestic 'loose monetary + loose fiscal' dual-easing tone is now more pronounced. Investors still vividly remember the 'TACO trade' from April and have developed coping strategies. Based on historical reviews of bull markets breaking below the 20-day moving average, if this is judged to be a 'TACO,' then the Wind All A Index should find relatively strong support between the 20- and 30-day moving averages, and there is no need for excessive panic in the short term.
Yang Chao, Chief Strategist at Galaxy Securities, stated that in the short term, rising external uncertainties are weighing on market risk appetite. Coupled with profit-taking pressures from some investors, this will exacerbate market volatility and increase divergence among individual stocks. However, the core drivers of this round of market activity have not changed. Liquidity is expected to continue trending favorably. During the critical window period for the '15th Five-Year Plan' and the third-quarter earnings reporting season, focus should be placed on areas targeted by new policy initiatives and sectors with strong earnings visibility.
Regarding Hong Kong stocks, Yang Chao believes that in the short term, an escalation in trade frictions has led to a decline in investor risk appetite, driving a correction in Hong Kong stock valuations. However, supported by domestic pro-growth policies and measures aimed at stabilizing the stock market through long-term capital inflows, investor sentiment is expected to gradually stabilize. Currently, Hong Kong stock valuations as a whole are at medium to high historical levels, and it is anticipated that the Hong Kong stock market may experience wide-ranging fluctuations going forward.
Deng Lijun, Chief Strategist at Huajin Securities, noted in a research report that from a long-term perspective, the slow bull trend in China's A-share market remains intact. First, profitability in A-shares is structurally recovering, and credit conditions may continue to improve: currently, profitability is likely to continue its structural recovery, and the long-term trend in profitability remains influenced by China’s own economy and policies; second, credit conditions may continue to improve, supporting valuations remaining at relatively high levels. During periods of structural recovery in profitability and credit improvement, A-shares tend to perform strongly, ensuring the continuation of the slow bull trend in the A-share market.
Latest Insights from Global Investment Giants
In its latest report, UBS Group pointed out that if the MSCI China Index falls to 74, it will find strong support, and investors may take the opportunity to buy on dips.
Wang Zonghao, Head of China Strategy at UBS Group, wrote in the report, 'Given that the MSCI China Index has risen 36% from its low point after the April escalation of the 'tariff war,' some profit-taking may occur in the short term. Considering that the current situation is similar to that in April, we expect more investors to buy on dips, and the MSCI China Index may find solid support around the 74 level.'
UBS Group noted that sectors which saw the largest declines during the April sell-off but subsequently rebounded strongly may face greater selling pressure this time, including data centers, internet, technology hardware, automobiles and components, and biotechnology.
UBS Group expects that the market will not return to the lows seen in April this year, citing three main reasons:
1. The rapid de-escalation of the April 'tariff war' suggests that more investors may seize the opportunity to buy at lower levels this time.
2. Global tariff uncertainties have decreased, and the conditions for de-escalation are clearer.
3. Global stock markets have risen sharply from their April lows.
In terms of sectors, Wang Zonghao maintains a 'barbell strategy,' favoring AI themes (A-share TMT and internet), A-share brokerages, and high-dividend stocks (defensive during sell-offs). Additionally, he is optimistic about the 'anti-involution' theme, including photovoltaics, chemicals, and lithium.
As of now, multiple foreign institutions believe that A-shares are reasonably undervalued recently, making them attractive for building global diversified portfolios or hedging against dollar asset risks.
Zhu Bingqian, Chief Strategist at Neuberger Berman Fund, stated that the A-share market faces some profit-taking pressure in the short term; however, the fundamental support for this rally has not changed. The fourth quarter remains promising, and the rationale for being bullish on Chinese assets over the medium term remains solid.
According to a recent report by Morgan Stanley, net inflows of foreign capital into China's stock market rebounded to $4.6 billion in September, marking the highest monthly inflow since November 2024. As of September 30, year-to-date passive funds have cumulatively flowed in $18 billion, far exceeding the same period last year. This trend indicates that global investors' confidence in the Chinese market is recovering.
Goldman Sachs stated in its latest report that it raised$TENCENT (00700.HK)$its capital expenditure forecast for this year through 2027 to RMB 350 billion and increased its cloud revenue growth forecast. Goldman Sachs believes that Tencent’s AI capabilities empower all its business lines, benefiting from its unique WeChat ecosystem and global gaming assets. It maintained a 'buy' rating for Tencent, raising the target price under the base case scenario from HKD 701 to HKD 770, and set the 'bull case' target price at HKD 846.
At the same time, Goldman Sachs also raised$Alibaba (BABA.US)$The capital expenditure forecast for the next three years has been significantly raised to RMB 460 billion, the highest among market predictions. Meanwhile, Goldman Sachs has increased its 12-month target price for Alibaba’s U.S.-listed shares by 14%, from USD 179 to USD 205, and also raised its target price for the Hong Kong-listed shares by 14%, from HKD 174 to HKD 199, maintaining a “Buy” rating. Supported by breakthroughs in AI models and diversification of chip supplies, Goldman Sachs has revised upwards Alibaba’s year-on-year cloud revenue growth rates for the next three quarters to 31%, 38%, and 37%, respectively. Goldman Sachs noted that although Alibaba’s near-term profitability may decline due to investments or losses in instant e-commerce, the market should focus on the initial profit recovery trend of the Taobao and Tmall platforms as well as the growth potential of its international cloud business, considering any pullback in share price as a buying opportunity.
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