Chinese stocks have escaped much of the recent sell-off | Wilnesh News
The latest global market volatility has reinforced China’s position as a unique market, even as its growth has slowed recently. While U.S. technology stocks plunged and Japanese stocks swung wildly in a historic two-day price action, Chinese stocks fell more modestly. According to Wind Information statistics, as of the end of the Asian trading week on Friday, before the U.S. stock market opened, the Nasdaq 100 Index and the Nikkei 225 Index had both fallen by about 2.5% in the past five trading days. In comparison, the Shanghai Composite Index fell 1.5% and the MSCI China Index rose 0.2%. Hong Kong’s Hang Seng Index rose 0.9%. “If markets in the U.S. and other developed markets continue to be volatile, people will look for returns elsewhere,” Matt Wacher, chief investment officer for Asia Pacific at Morningstar Investment Management, said in a phone interview Friday. He said: “We believe that fundamentals will eventually win out and capital will flow back to some companies in China because they are too attractive an investment opportunity to miss.” EPFR’s capital flow data shows that international investors in 8 It sharply increased its purchases of Chinese stocks on Monday, March 5, and then reduced its holdings the next day. Data shows that as of August 6, investors were still net buyers of Chinese stocks in the third quarter. “We believe international investors have reason to consider reallocating some of their allocations back to Chinese equities after taking relatively light positions,” William Yuen, investment director at Invesco, said in an emailed statement on Friday. “China Valuations are near historic lows, and the stock market is broad and deep enough for investors to look for growth opportunities. “Finally, there are signs of stabilization in the economy as policy easing measures take effect. Finally, there is a low correlation between Chinese stocks and U.S. stocks. Can provide investors with diversified benefits.” Chinese stocks, especially those traded on the mainland, have historically had low correlation with global market movements due to Beijing’s capital controls and other restrictions. International investors without business in China have gradually been able to purchase some mainland stocks, known as A-shares, through Hong Kong’s stock connect scheme. However, HSBC analysts noted in a report on August 6 that “foreign long funds and hedge funds have been actively selling” A shares this year. Dollar). The stock has declined over the past year. Investors can profit from the currency of a country with low interest rates and then invest in currencies with higher yields, but if this suddenly changes, investors may suffer losses. Assumptions about how much return an asset might generate relative to other assets. When 10-year Treasury yields are above 4% (compared to China’s 2.17%), it’s not difficult for investors to choose where to put most of their money. HSBC’s multi-asset team expects the stock market selloff caused by the unwinding of yen carry trades to likely last a month. Steven Sun, head of research at HSBC Qianhai Securities, and his team said in a report on August 6 that if the Federal Reserve does cut interest rates, this may support the Chinese stock market. Analysts said the U.S. interest rate cut means the People’s Bank of China may further loosen monetary policy, “which is critical to the recovery of China’s fledgling real estate market.” U.S. interest rate cuts are generally good for emerging markets such as China, where the latest trade and inflation data released in the past few days show that domestic demand is still growing even though the economy is not necessarily operating at full speed. Data, including retail sales, will be the focus after rising just 2% in June, but global institutions’ cautious attitude toward Chinese stocks is unlikely to change quickly. “China should still prefer U.S. markets to Chinese financial markets,” the company said in an email. “Periods of economic stress are generally good for U.S. markets, even if the U.S. is the source of the stress.” We believe this is because the U.S. economy More diversified than an export-oriented economy (which China still is). “This has been the policy response so far. Deflation is the core issue.” He pointed out that the focus of last month’s “Third Plenary Session” was “the ability to withstand external shocks” rather than a series of domestic issues. Chinese stocks have struggled to rebound. “In the past few days, some companies such as Alibaba and Tencent have performed quite well despite global volatility. I think this is because from a valuation perspective, they have been priced quite reasonably,” said the largest company in the Hang Seng Index by market capitalization. Shares of Tencent and Hong Kong-listed Alibaba closed on Friday with gains of more than 3% this week. “As far as Alibaba is concerned, it still has a very good management team, similar to Tencent,” Wacher said, noting that Alibaba’s efforts to improve its balance sheet and cut costs are in the interest of investors. “We think their inner focus is on Chinese consumption, and Chinese consumption will get better,” he said. “The majority of their revenue will be generated in China, which is less susceptible to the trade war and the shenanigans that continue to happen in the global economy. From that perspective, it’s an attractive opportunity.”
