Smarter News Now
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting
No Result
View All Result
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
No Result
View All Result
Smarter News Now
No Result
View All Result
Home Investing News

Easing COVID-19 rules, growth focus aid China bulls’ cautious return

by
June 30, 2022
in Investing News
0
Easing COVID-19 rules, growth focus aid China bulls’ cautious return
0
SHARES
11
VIEWS
Share on FacebookShare on Twitter
REUTERS

HONG KONG — The latest easing of coronavirus travel rules combined with other encouraging policy signals have began luring some foreign investors back to Chinese stocks, raising the chances that the market can sustain its bounce after months of heavy selling. 

As the S&P 500 is about to close its worst first half of any year since 1970 and bonds have taken a thrashing, China’s beaten-down equity markets start looking like a shelter from a global storm of runaway inflation, interest rate hikes, and recession fears. 

China’s blue-chip CSI300 index is up about 20% from April lows, as is the Shanghai Composite after losses of more than 10% in the first quarter. 

The gains, together with the relaxation of lockdowns and signals that Beijing could ease up both on virus policies and regulatory clampdowns, have tempted money managers, who were quitting China en-masse in March, to return. 

Those who were on the sidelines, “have shown some increase in appetite for China in the past few weeks,” said Elizabeth Kwik, investment director of Asian equities at British asset manager abrdn. “Some have chosen to add to their position.” 

Foreign investors bought a net 74.6 billion yuan ($11 billion) worth of China-listed shares in June so far, which is set to be the biggest monthly inflow this year, according to data from Refinitiv Eikon. 

This week, travel and gambling stocks leapt as China halved travelers’ quarantine to one week. 

Investors hope it is a sign Beijing could eventually ease its draconian zero COVID-19 policy, and authorities are making efforts to come good on promises to support the world’s second-biggest economy. 

“COVID zero policy has been mentioned as the biggest hurdle facing investors as they look to understand China’s current policy focus,” Morgan Stanley analysts said in a Wednesday report. “These latest developments will help rebuild investor confidence that economic growth is being prioritized.” 

Unlike the rest of the world, China has no inflation problem. coronavirus disease 2019 (COVID-19) curbs and the absence of massive consumption-focused stimulus have kept demand soft and put a lid on prices — allowing the central bank to ease policy while most of its peers keep tightening. 

Senior officials have also vowed to support capital markets and growth and have eased a crackdown on once-hot sectors such as technology. 

Shares in e-commerce giant Alibaba, which were pounded through 2020 and 2021, have rallied 60% from a record low in March. 

J.P. Morgan analysts last Friday advised clients to add to positions in China directly, a shift from earlier advice to keep indirect exposure via commodities or other markets. 

PARING LOSSESThe market rebound is also helping improve the performance of regional funds that stayed invested last year and through March, when Western sanctions on Russia stoked fears China could also become a target. 

A Eurekahedge index tracking Greater China-focused hedge funds with long-short strategies gained 1.1% in May, after losing 13.6% in the first four months of 2022. 

Anatole Investment Management Ltd., a Hong Kong-based firm managing around $1.9 billion with its flagship fund, saw monthly returns turn positive for May and extend in June after a 22% drop in the first four months, people familiar with its performance said. 

They requested anonymity because they are not authorized to speak publicly. That was partly due to bets on Chinese internet firms after Chinese authorities, concerned about markets, signaled willingness to wind down a regulatory crackdown of nearly two years. 

When contacted by Reuters, the fund described this month’s expansion as significant and said Greater China remained its biggest exposure. 

Aspex Management, which manages around $7 billion, reported positive returns in April and May, according to documents seen by Reuters, trimming losses for the first five months of the year to 14.4%. Aspex did not respond to queries. 

RESETThere are still reasons to be cautious and June’s $11 billion in equity inflows are modest against a tide that saw roughly $50 billion in outflows from stocks and bonds over the first quarter, according to the Institute of International Finance. 

Investors worry Western sanctions on Russia could serve as a blueprint for China, while the health of the property market, once its growth engine, has been a concern ever since developer China Evergrande defaulted on some debts last year. 

State Street Global Markets Yuting Shao said the firm had not returned to overweight on Chinese stocks, while Ewan Markson-Brown a fund manager at CRUX Asset Management was avoiding anything to do with real estate. 

“The property market is still a big issue,” he said. 

Still, money is flowing again and sentiment has shifted. 

The 20 biggest open-ended and exchange-traded funds traded in Hong Kong with Greater China equities strategy all reported positive returns last month and 17 of them grew their assets in May, according to Morningstar data. 

Paul O’Connor, head of the multi-asset team at Janus Henderson in London, said China has had its “capitulation” and now it has its chance to outperform. 

“They have had a valuation reset and they don’t have the policy headwinds we have in other places where central banks are draining liquidity and putting up interest rates.” ($1 = 6.7025 Chinese yuan renminbi) — Xie Yu/Reuters

ShareTweetPin

Related Posts

Stocks decline on profit taking, recession fears
Investing News

Stocks decline on profit taking, recession fears

August 23, 2022
Peso climbs vs dollar as RTB offer starts
Investing News

Peso climbs vs dollar as RTB offer starts

August 23, 2022
PNR cancels bids for 3 projects after finding them ‘non-feasible’
Investing News

PNR cancels bids for 3 projects after finding them ‘non-feasible’

August 23, 2022
Senate grills Rodriguez on approval procedures for sugar import order
Investing News

Senate grills Rodriguez on approval procedures for sugar import order

August 23, 2022
Trade dep’t expecting sugar price monitoring report by Friday
Investing News

Trade dep’t expecting sugar price monitoring report by Friday

August 23, 2022
Fisherfolk seek halt to reclamation on municipal fisheries
Investing News

Fisherfolk seek halt to reclamation on municipal fisheries

August 23, 2022
Next Post
Marcos takes power 36 years after father’s ouster 

Marcos takes power 36 years after father’s ouster 

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Email Address *
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!
 

Recommended

RFM earnings down by 3.5% to P355M

RFM earnings down by 3.5% to P355M

August 4, 2022
Heatwave fee for Asia’s gig workers does little to cool climate stress

Heatwave fee for Asia’s gig workers does little to cool climate stress

July 21, 2022
9 Signs You Have a Strong Car Accident Claim

9 Signs You Have a Strong Car Accident Claim

July 7, 2022
Deloitte Philippines strengthens practice with new Partners and dedicated climate & sustainability team

Deloitte Philippines strengthens practice with new Partners and dedicated climate & sustainability team

August 2, 2022
Now you can access South African-based premium products from one smart portal

Now you can access South African-based premium products from one smart portal

June 27, 2022
Samal resort owners seek review of bridge project’s environmental certificate 

Samal resort owners seek review of bridge project’s environmental certificate 

July 31, 2022
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting

Copyright © 2022 SmarterNewsNow.
All Rights Reserved.

Disclaimer: SmarterNewsNow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

No Result
View All Result
  • About Us
  • Contact Us
  • Email Whitelisting
  • Home
  • Privacy Policy
  • Terms & Conditions
  • Thank You

Copyright © 2020 SmarterNewsNow. All Rights Reserved.