China - Market Strategy 05 (Jan 23 - Dec 24)

[behappyalways]

#China's state investor Central Huijin estimated to have spent 330 bn yuan increasing #ETF holdings in Q1 to support stock market
https://twitter.com/YuanTalks/status/17 ... 2848607726

[winston]

Global investors snap up Chinese stocks for third month in a row, in more upbeat tone for US$9 trillion market

Valuations in China’s markets are ‘worthy of allocations’, Everbright Securities analyst says

Overseas buying is expected to carry on at least in the near future: Goldman Sachs

by Zhang Shidong

Source: SCMP

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

[winston]

‘The worst seems over’ for ‘cheap’ and ‘reasonably attractive’ Chinese stocks: EFG Asset Management

‘The worst is over for China, and a lot of negative news has already been priced in’, EFG Asset Management’s deputy CIO says

CSRC measures announced in April have changed market sentiment from very negative to positive, he says

by Enoch Yiu

Source: SCMP

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

[winston]

China Strategy: Labour Day holiday highlights cautious consumer stance

Consumption data during the Labour Day holiday (1-5 May) highlighted that consumer sentiment remains subdued with robust traffic volume offset by a lower per capita spending, suggesting that consumption downgrade trend continues.

Despite that the number of tourists was 28% higher than the 2019 level, spending per tourist was 11% lower as more visitors travelled to smaller and lower-tier cities.

Duty-free sales trend in Hainan Island during the Labour Day holiday remained soft with Hainan offshore duty free sales down 38% YoY to CNY547m sales during the holiday period.

The latest People’s Bank of China’s (PBoC) 1Q24 Urban Depositor Survey published at the end of April also suggests consumer sentiment appears to be stabilising but the pace of recovery is subdued.

While 23% of respondents indicated a higher consumption propensity in 1Q24, which was at the same level in 4Q23, but this was well below the pre-pandemic level.

Hence, policy implementation post the April Politburo meeting would be a key catalyst to watch in the coming months, especially with regards to accelerating government bond issuance and housing inventory destocking.

We view the “trade-in programs” as being the more relevant in boosting consumption in the near-term. In addition, earnings growth estimates revision momentum would be another key indicator to watch from a corporate fundamental perspective.

From a fund flow perspective, global long-only mutual funds are still underweighting China in April despite narrowing the underweight position.

Southbound net inflows picked up in April and reached CNY74b vs an average of CNY41b in 1Q24 (Exhibit 4).

Post the recent bounce, Hong Kong (HK) and Chinese equities are trading around the lower-end of the range with Hang Seng Index at 8.5x forward price-to-earnings (PE) and MSCI China Index at 9.4x forward PE.

While the valuation discount of MSCI China Index vs MSCI Emerging Market Index has narrowed marginally to 16%, it is still at the high-end when compared to the average of 5% discount over the past five years.

In the meantime, we highlight opportunities in our investment themes:
i) the proliferation of generative artificial intelligence (AI),
ii) identifying quality growth and market leaders amid a bumpy recovery, and
iii) quality plays with decent yield to cushion market volatility.

Source: OCBC

[winston]

China to nurture stock rally by masking live foreign flows data

The Shanghai and Shenzhen exchanges plan to cease displaying real-time figures on purchases or sales of local stocks through trading links with Hong Kong

The two bourses will provide the turnover details on a daily basis, along with the 10 most-traded stocks via the northbound channel

Source: Bloomberg

https://www.scmp.com/business/banking-f ... 07d6&tc=14