China - Market Strategy 06 (Jul 24 - Dec 26)

[winston]

Bears flee China stock markets as regulatory curbs squash short positions to a 4-year low

The value of stocks shorted on the mainland’s exchanges has slid to US$3.2 billion, a level not seen since May 7, 2020

by Zhang Shidong

A slew of regulatory constraints has forced the unwinding of bearish bets on Chinese stocks providing tonic to investors which some analysts say could lift sentiment and drive markets higher.

The outstanding value of shorted stocks on the mainland’s exchange slid to 23.2 billion yuan (US$3.2 billion) at the end of July, a level not seen since May 7, 2020, according to data from China Securities Finance and Bloomberg.

The value dropped 0.6 per cent on July 31, marking the 15th straight day of declines for the longest such streak on record, the data showed.

Source: SCMP

https://www.scmp.com/business/china-bus ... pe=section

[winston]

China’s Politburo meeting sends positive vibes to investors after Third Plenum disappoints

Stocks surge, and investment banks like Nomura and Goldman Sachs hail pro-growth Politburo meeting

by Zhang Shidong

A Politburo meeting this week, chaired by President Xi Jinping, concluded that economic headwinds in China were reining in growth, an admission that drew loud cheers from investors who are now confident authorities will roll out forceful supportive measures in the world’s second-largest economy.

Xi and his 23 colleagues in the Chinese Communist Party’s highest decision-making Politburo acknowledged that the country would need to do more to achieve the growth target of around 5 per cent this year.

They pledged to deploy “countercyclical measures” - the first reference to the term by the Party’s elite in a year - as well as adopt more proactive fiscal and monetary policies and spur household consumption.

Source: SCMP

https://www.scmp.com/business/china-bus ... pe=section

[winston]

Global hedge funds added Chinese domestic stocks, ADRs in July, Goldman says

China’s valuations are at the lower end compared with global markets and have underperformed both developed and emerging markets, said Goldman Sachs analysts

by Zhang Shidong

Global hedge funds added to their exposure to Chinese stocks listed both on the mainland and US exchanges last month, as July’s high profile Politburo meeting sent positive vibes to investors and indicated Beijing will deploy “countercyclical measures” to stimulate short-term growth in one of the worst performing markets in the world.

A report from investment bank Goldman Sachs over the weekend said hedge-fund managers added to their holdings of Chinese stocks in July without providing specifics of the purchases.

Still, hedge funds’ allocations to yuan-denominated stocks and American depositary receipts (ADRs) remain close to five-year lows, it said.

Source: SCMP

https://www.scmp.com/business/china-bus ... pe=section

[behappyalways]

"#China took another step to obscure information about overseas funds going into & out of its sagging stock market, saying it will stop publishing daily flows data in the middle of August"
https://x.com/ChinaBeigeBook/status/1818343416578625782

[winston]

Chinese stocks get upgraded as bear-market risks seen tempered by state buying support

Chinese stocks could insulate global fund managers from deeper losses as global risk assets face fresh dangers from frothy market valuations and weak manufacturing cycles, according to analysts at BCA Research.

The firm upgraded Chinese onshore equities to overweight from neutral within its global and emerging market (EM) allocations, according to a report on Wednesday.

It lifted its allocation on their investible or offshore peers to neutral from underweight, saying any losses are likely to be limited in a sell-off.

Source: SCMP

https://www.scmp.com/business/markets/a ... pe=section

[behappyalways]

60 More Chinese Stocks To Be Culled From MSCI Indexes
https://www.zerohedge.com/geopolitical/ ... ci-indexes

[behappyalways]

To be listed soon???

Huawei dominates the world! Who to compete with?

'24.08.27【豐富│東南西北龍鳳配】Pt.2 華為制霸天下！誰與爭鋒？
https://m.youtube.com/watch?v=zs22Iumu_4E

[winston]

UBS bullish on China, as profit growth, buy-backs give MSCI Index a 10% upside

‘The driver of the stock market is not GDP growth, but improvements in ROE and profit growth,’ UBS’s China strategist James Wang says

by Zhang Shidongin and Yuke Xiein

The MSCI China Index will probably rise as much as 10 per cent in the next three to six months, as earnings growth picks up and companies look to boost returns to shareholders through buy-backs and improved governance

The gains will be driven by an average 7 per cent growth in profit for companies on the index in the second half and some valuation expansion.

The correlation between annual GDP [gross domestic product] growth and stock market performance is extremely low. “The driver of the stock market is not GDP growth, but improvements in ROE and profit growth.”

Global hedge funds’ position on Chinese stocks were at near a five-year low in July, according to Goldman Sachs, while Morgan Stanley warned that Chinese equities may be in a secular bear market.

Source: SCMP

https://www.scmp.com/business/china-bus ... pe=article

[winston]

<Research>HSBC Research Stays Overweight on CN Equities, Outlines 10 Potential Revitalising Factors for CN Mkt

HSBC Global Research wrote in a report on the downturn in investment sentiment in China's stock market, with HSCEI almost halving since 2021 to-date.

However, the broker remained bullish on the outlook for China's stock market, citing 10 factors that could re-energise the market, and saying that although it is still early days, they appear to be slowly taking effect.

Potential factors include:-

1. Potential recovery of the Mainland property market

2. Expected revival of consumer spending supported by measures to stimulate domestic demand

3. Room for growth from consolidation in sectors such as electric cars, property, OTA platforms and healthcare

4. Potential for corporate earnings to grow by 20% this year

5. Increased dividend payouts and buybacks under the guidance of the central government are expected to bring some support to the market

6. China's capital market system to become more sophisticated, with improvements in IPO processes and disclosure standards.

7. Residents' deposits are at record levels

8. Pension funds such as the National Social Security Fund are sitting on large amounts of cash.

9. US bond yields are falling, which is relatively favourable for H-shares, particularly internet companies.

10. It is expected that capital flows may shift as investment themes in other parts of the region weaken.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[behappyalways]

China is trading at a 8x fwd PE vs 24x for the US
https://x.com/zerohedge/status/1831489361025905010


The number of stocks within #China's blue-chip CSI 300 Index currently below their 120-day moving average has reached 223, marking the highest level since the end of January.
https://x.com/Sino_Market/status/1831217151048556761