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

[behappyalways]

Chinese stocks just had their worst start to the year since 2016
https://x.com/Mayhem4Markets/status/1878444960548012475

[winston]

China tech stock hedges cheapen before Trump becomes president

One sector they are zeroing in on is China tech, and the sentiment is: wait and see.

The cost of protecting against swings in the Hang Seng Tech Index is hovering around a four-month low relative to the broader Hang Seng Index.

At the same time, the number of total options outstanding on the gauge fell to the lowest since July 2023 at the most recent monthly expiration on Dec 31.

“Longer term fundamental investors are comfortable with their current HSTECH positions and are not overly aggressively buying downside protection.”

Source: Bloomberg

https://www.businesstimes.com.sg/compan ... -president

[winston]

China directs funds to stabilise stock market amid Trump tariff threats

Investments from the National Social Security Fund, mutual funds and other sources, will be increased to boost the stock market, regulators say

by Cao Liand Yuke Xie

China will direct medium- and long-term funds, including commercial insurance funds, the National Social Security Fund and mutual funds, to increase their participation in the stock market.

Source: SCMP

https://www.scmp.com/business/china-bus ... e=homepage

[behappyalways]

Plowing insurance & social security funds into the worst performing stock market on earth over the past decade+. What could go wrong?
https://x.com/ChinaBeigeBook/status/1882250109582491831

[winston]

China Strategy: A tug of war between tariffs and policy support

Over the weekend, President Trump signed executive orders imposing 25% additional US tariffs on imports from Canada and Mexico, and an additional 10% tariff on imports from China, to be effective from 4 February.

The US will also withdraw de minimis treatment for these imports.

In addition, a tariff review across a range of countries has already been announced and will be due by 1 April.

So far, the response from Chinese policymakers have been restrained but policy response post Chinese New Year holiday is worth monitoring. While the announced tariff rate of 10% is lower than consensus estimate, we maintain our expectation that 1Q25 is likely to be clouded by the escalation of tariff disputes and US-China geopolitical tension.

We reiterate our preference for defensive yields and policy beneficiaries. At the industry and sector level, we prefer domestic-focused ones and avoid export-focused with high US revenue exposure.

From the China policy support front, China financial regulators announced a basket of measures aiming to encouraging medium- and long-term funds to increase asset allocation to the onshore A-share equities.

Quantitative targets are given to insurers and mutual funds, regarding their equity investment. We estimate these quantitative measures could potentially drive incremental fund flow amounted to CNY1.2t in 2025, accounting for about 1.6% of tradable market cap of the onshore A-share market this year.

In addition, these inflows are expected to be consistent in the next few years, creating steady and growing inflow to the onshore equity markets. To put into perspective, average Northbound inflows amounted to CNY225b per year during the period of 2019-2023. Also, the setting up of a medium- to long-term investment horizon for major institutional investors in the onshore A-share market could help lower volatilities.

We view it as part of the effort to stabilise the stock market and support market sentiment, which will be in-line with the ongoing effort to cultivate a “slow-bull” market in the onshore A-share equity market.

We believe defensive yield stocks are likely to benefit given that relatively low volatility and their stable cashflow will support relatively high dividend yield. The index-heavy, high dividend yielding China banks, energy and telcos are likely to be preferred by insurance funds given their liability profile.

While the index-heavy, high dividend yielding A-shares stocks are well-positioned to benefit, we believe the corresponding H-share peers could also benefit indirectly given that they offer relatively high dividend yield and are trading at a discount vs their A-share counterparts.

Chinese brokers are perceived as high-beta A-share market proxies and could potentially benefit from a recovery in investor sentiment and a pick-up in turnover.

Source: OCBC

[behappyalways]

"In the past 3 months, foreign investors have pulled nearly $12 billion from #China-focused funds, all but reversing October's inflow of $13 billion"
https://x.com/ChinaBeigeBook/status/1887146495406739479

[winston]

Hedge Funds' Net Purchases of CN Stocks Last Wk Hit 4Mth+ High; Fidelity Adding CN Stocks

China-made DeepSeek sends shockwave to the world. This, compounded with the market anticipation that further stimulus measures will be introduced at the “Two Sessions” of the mainland China next month, may partially offset the threat of US tariffs.

Chinese stocks have once again favored by international investors.

Citing Goldman Sachs trader records, foreign media reported that hedge funds' net purchases of Chinese stocks last week touched an over-four-month high, almost entirely driven by long positions.

Fidelity International also said it is overweighting Chinese stocks and adding them to investment portfolios.

Taosha Wang, a portfolio manager at Fidelity based in Hong Kong, said the broker is more bullish about the Chinese market.

In addition to economic fundamentals and a return of “animal spirits”, she said that the new DeepSeek AI tool is also entailing investment opportunities.

The MSCI China Index has climbed 14% since its January low, and on Tuesday (11th) it hit a three-month high before receding.

Last week, the HSTECH also entered a “bull market”.

Source: AAStocks Financial News

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

[winston]

DeepSeek drives US$1.3 tril China stock rally as funds pile in

By John Cheng & Winnie Hsu

China’s onshore and offshore equity markets have added more than US$1.3 trillion (RM5.7 trillion) in total value in just the past month amid such reallocations, while India’s market has shrunk by more than US$720 billion.

The MSCI China Index is on track to outperform its Indian counterpart for a third-straight month, the longest such streak in two years.

The MSCI China Index is trading at just 11 times forward earnings estimates, compared with about 21 times for the MSCI India Index.

Source: Bloomberg

https://theedgemalaysia.com/node/744551

[winston]

Muddy Waters CEO Says Uptrend in CN Equity Mkt Unreliable, But He Won't 'Kick Against pr**ks' for Now

The current uptrend in China's stock market is unreliable, based on unreliable corporate accounting and geopolitical risks, Carson Block, CEO of Muddy Waters, said in an interview with Bloomberg.

There is some momentum in China's stock market and as a short seller, he would not “kick against the pr**ks” at the moment, but would not see China as a viable option for tactical investment, Block added.

Source: AAStocks Financial News

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

[behappyalways]

China’s top 7 technology giants are revealed!
Tencent’s market capitalization is about NT$18 trillion.
Morgan Stanley is the first choice to invest in Tencent!
It says that AI will help stock prices continue to rise.

中國科技7巨頭出爐! 騰訊市值約18兆台幣奪冠 大摩首選投資騰訊! 稱AI將助股價持續上漲｜記者 薛霈瑄｜國際焦點20250219｜三立新聞台

https://m.youtube.com/watch?v=4doi4Xcinto