Wall Street tycoons: Bet big on Chinese stocks, buy everything!
Just yesterday, billionaire hedge fund founder David Tepper said in an interview with CNBC: I think the Fed's move last week will lead to China's loosening of monetary policy, but I didn't expect their policy to be so strong. I think this is a comprehensive shift, so we hold more Chinese stocks.
"We have increased our holdings of some Chinese stocks. I may have said in the past that I would not exceed the 10% or 15% holding limit, but now that may no longer be true." Tepper further stated: "I basically bought all the stocks, and I would be happy to see the stock price pull back. When the pullback occurs, I may set a new investment limit." He may double the investment limit on Chinese stocks!
Tepper also pointed out that stocks in the Chinese market are cheaper than US stocks!
Goldman Sachs: This time is different, the upward momentum continues!
In addition, many foreign institutions have issued articles claiming that this stimulus measure for A-shares is unprecedented!
Goldman Sachs said: The trading volumes of A-shares and Hong Kong stocks have shown explosive growth, one-sided long strategy funds (long only) are also buying, and trading in the derivatives market is also very active!
In a report released on Thursday, Rubner, managing director of Goldman Sachs Global Markets, said that Goldman Sachs has begun to see the FOMO mentality of fear of missing out on the rise in China, and the market consensus has begun to change. This may not be a counter-trend trade!
The current position is very favorable for Chinese stocks. Rubner listed the following signs to prove it:
Demand for Chinese stocks hit a record high. On Tuesday, September 24, Chinese stocks on Goldman Sachs' Prime (PB) book collectively saw the largest single-day net buying since March 2021, and the second largest single-day net buying in the past decade, almost entirely driven by long buying.
From a fund flow perspective, on Wednesday, September 25, Goldman Sachs saw continued demand for Chinese stocks, i.e. long buying.
Chinese stocks have been bought for eight consecutive days in Goldman Sachs PB business (macro managers, quants and multi-managers, i.e. short-term traders) rather than traditional equity long/short or long only (LO). Stocks may be forced higher.
As of the end of August, global mutual funds allocated 5.1% of their assets to Chinese stocks, down from 99% over the past decade.
As of the end of August, active mutual funds' holdings in Chinese stocks were still 310 basis points below the benchmark on an asset-weighted basis.
In Goldman Sachs' PB book, China's total and net allocations remain low, and are now lower than the 93% and 86% levels of the past five years, respectively.
Before the recent rally, hedge funds had less than 7% allocation to Chinese stocks, about a five-year low.
In addition, Morgan Stanley analyst Laura Wang released a report saying that the unexpected market support measures of the People's Bank of China should help improve investor sentiment and liquidity, and promote positive responses in onshore and offshore markets in the short term! Morgan Stanley believes that the form of these market stabilization measures is unprecedented in the Chinese stock market in recent years! Especially the new monetary policy tools to support the capital market.
