Markets Recon’s Post

China's Stimulus: What Asset Managers Are Saying About Valuations and Risks. China’s latest stimulus program aims to boost its economy, but how do asset managers see its impact on valuations, risks, and opportunities across equities and bonds? 🤔 Read the quick insights below and swipe to see charts. 👨💻 👉 Edmond de Rothschild Asset Management highlighted the mixed outlook on Chinese equities, noting that while the stimulus supports growth, the underlying structural challenges such as high debt levels remain. Investors should be cautious, as the effects may take time to materialise, particularly in consumer sectors. 🔗 https://lnkd.in/ef2A_aWN Federated Hermes Limited is cautiously optimistic, suggesting that while consumption and infrastructure sectors will see a short-term boost, investor focus should be on longer-term reform. They believe valuations in real estate and consumer sectors could become more attractive as liquidity improves, but this doesn’t signal an immediate bullish shift. 🔗 https://lnkd.in/edbRAH84 State Street Global Advisors warned that while asset prices have risen, corporate earnings remain sluggish. They suggest caution for investors in equities, as the stimulus seems to lift prices rather than fundamentals. The bond market may offer more stability as yields adjust to looser financial conditions. 🔗 https://lnkd.in/e6PPRkcT M&G Investments sees opportunities for a short-term lift in growth but emphasizes the ongoing risks. Investors should remain cautious in sectors like property, which continue to face headwinds. The stimulus could support fixed-income markets, where select high-yield bonds may become attractive due to lower rates. 🔗 https://lnkd.in/e8PH9_Ha Lombard Odier Investment Managers remains sceptical about the long-term impact. They argue that while the stimulus may provide short-term liquidity boosts, it won’t address deeper economic vulnerabilities. The firm remains cautious on both Chinese equities and bonds, advising investors to be selective and focus on structural trends over cyclical stimuli. 🔗 https://lnkd.in/evcyrgvy For more, visit Markets Recon. 💥 📈 #China #Investing #InvestmentManagement #FundManagement #MarketsRecon #CriticalIntelligence

The fundamental risk-reward of China and Hong Kong equities has reached an inflection point and is likely in an early stage of a broad recovery. Our Chief Investment Strategist Eli Lee lays out why we are turning constructive on the outlook.

The report examines the perspectives of some prominent Asian and emerging-markets active equity managers regarding China's recent policy changes and how they have positioned their portfolios in China. We also analyze the changes to key benchmarks tracked by passive funds. https://lnkd.in/eCPJQVdq

China's Market Momentum: What's Next? 💰 Post 3 of 3 Timothy Moe, Goldman Sachs equity strategist, shares insights on China's market outlook. Despite Tuesday's pullback, Moe remains optimistic, citing a 15-20% upside potential for Chinese equities 📈. Key Takeaways: - Market was overly optimistic, with momentum indicators "superhot" 🔥 - National Development and Reform Commission's lack of stimulus announcement led to correction 📉 - Small and mid-cap China A-shares present opportunities for growth 🚀 Statistics: - Chinese offshore market traded at 8.4 times forward price earnings ratio on Sept 11th, now at 10.8 📊 - Market up 38% since Sept 11th, with potential for further growth 📈 Investment Opportunities: - Small and mid-cap China A-shares, particularly in iShares 📈 - Hedge funds shifting from H-shares to A-shares, indicating potential for growth 📊 Expert Insights: "Even in a challenged environment, you can have moves that could be very consequential for investors." - Timothy Moe, Goldman Sachs What's Next? - Ministry of Finance meeting and National People's Congress Standing Committee meeting in Nov will provide clarity on policy support 📆 - Keep an eye on momentum indicators and market sentiment 📊 #ChinaMarket #EquityInvesting #GoldmanSachs #MarketOutlook #InvestmentOpportunities #FinancialInsights #EconomicGrowth #AsianMarkets #StockMarket #InvestingInChina

Morgan Stanley's mid-year outlook for China's equity markets: Navigating uncertainties and identifying opportunities In this insightful report, Morgan Stanley's Laura Wang presents a comprehensive mid-year outlook for China's equity markets. Amidst global uncertainties and market volatility, the report offers valuable insights for investors seeking to navigate the landscape and identify potential opportunities. Key takeaways: Offshore H and onshore A shares: The report delves into the relative attractiveness of offshore H shares and onshore A shares, providing guidance for investors seeking to optimize their China equity exposure. Benchmark earnings growth: The report examines the expected trajectory of benchmark earnings growth, taking into account various economic factors and potential risks. Bull and bear case scenarios: A thorough analysis of bull and bear case scenarios is presented, helping investors understand the potential upside and downside risks associated with China's equity markets. Overseas expansion opportunities: The report explores the prospects for Chinese companies expanding overseas, highlighting potential growth drivers and challenges. Intrigued by the full report? Comment below and I'll share it with you! Let's engage in a discussion - what are your thoughts on Morgan Stanley's outlook for China's equity markets? #China #investing #MorganStanley #equitymarkets #macroeconomics:

After a tough year, China’s equity markets are looking battered and bruised, but where others see disaster we see potential. Opportunities abound for selective investors who remain unfazed by the negative sentiment. #investing #china #equities #markets #ActiveInvesting

4𝐐 2024 𝐀𝐬𝐬𝐞𝐭 𝐀𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐞𝐬: 𝐁𝐞𝐧𝐞𝐟𝐢𝐜𝐢𝐚𝐫𝐢𝐞𝐬 𝐮𝐧𝐝𝐞𝐫 𝐭𝐡𝐞 𝐑𝐚𝐭𝐞 𝐂𝐮𝐭 𝐂𝐲𝐜𝐥𝐞 The asset allocation strategies for this quarter, as outlined by Belle Liang, our Chief Investment Officer of Investments and Wealth Solutions, highlight the potential beneficiaries of the Fed's rate cut cycle. Fixed income, which has shown signs of recovery in the past three months, is expected to appreciate further as the US normalizes its short-term rates. This will prompt investors to seek alternatives to money market instruments to maintain yields, making investment-grade bonds the major beneficiaries of this transition. Furthermore, the Fed's anticipation of consecutive cuts, aiming for a soft landing of the economy, could present opportunities for emerging Asia fund flows. ASEAN markets have rebounded from the impact of the COVID years, experiencing recovery in tourism income, international trade, and foreign direct investment. A weakening US dollar and China's recent monetary and fiscal measures to stimulate growth are expected to further enhance the earnings potential of ASEAN corporates. On the other hand, the Hong Kong stock market, which has been buoyed by an unprecedented liquidity surge, holds the potential for further re-rating if China's rescue package can effectively support the real economy. #HangSengBank #WealthWise #GlobalAssetAllocation #GlobalBondMarket #GlobalEquities #AsianEquities   Disclaimer: The views as expressed in the above content represent the personal views or opinions of the author. The information herein is based on sources believed to be reliable and the opinions contained herein are for reference only. The above content is not and should not be considered as a recommendation, offer or solicitation to deal in any of the investment products mentioned herein. The information contained in this content may be indicative only and has not been independently verified. Investment involves risks. The value of investments can go down as well as up and past performance is not necessarily indicative of future performance. Investors should refer to the offering documents and risk disclosure documents of the relevant investment products in detail before making any investment decision. Before making any investment decisions, investors must take into account of their own investment objectives, financial position and particular needs and where necessary consult their own professional advisers before making any investment. 

Despite US and European investors scaling back, global interest in Chinese stocks persists, with allocators from Southeast Asia, the Middle East, and other markets looking for stronger signals to increase their exposure. #China #equities #Middleeast #SEA #investment #investors

Goldman Sachs, UBS, and BNP Paribas are upbeat about Chinese stocks in anticipation of the July plenum, signaling a potential market shift. Despite concerns like unresolved property issues and deflation risks, foreign interest in Chinese stocks is rising, with global emerging market funds adjusting their stance to neutral. Key factors include China's efforts to strengthen market quality and regulatory oversight. UBS and BNP upgraded their ratings on Chinese indices, citing resilient earnings and policy support. The recent surge in the Hang Seng Index reflects growing optimism. However, challenges remain, especially in the property sector. Investors are cautious, awaiting stronger domestic data. DBS Bank notes increasing interest in undervalued Chinese equities, while Daiwa Securities Capital Markets predicts a narrowing performance gap among global equities. Overall, while optimism prevails, investors remain watchful amid ongoing economic uncertainties in China. #Growth #Performance #Investors #Resilence #StockMarket #Optimism I South China Morning Post SCMP

😶 🇨🇳💼🕳 Bloomberg [excerpt]: #China’s big #stockmarket declines aren’t enough to warrant putting #money in the country, according to the chief investment officer of #GoldmanSachs Group Inc.’s wealth-management #business. “All our clients are asking us that question — given how cheap China appears, people inevitably say, well, has it discounted the worst news?” Sharmin Mossavar-Rahmani said in a Bloomberg Television interview. “Our view is that one should not invest in China.” She cited a host of reasons for her take, including expectations for a steady slowdown in the #economy over the next decade. China will struggle with a weakening in the three pillars of growth up to now — the property market, infrastructure and exports, she said. A lack of clarity on China’s policymaking, along with patchy economic data, add to concerns about investing there, Mossavar-Rahmani said. China’s Communist leadership has over the past year emphasized the importance of information security and put curbs on what data can be removed from the nation. The statistics bureau also suspended for a time some unemployment figures. On Monday, Beijing announced that the country’s premier — second only to President #XiJinping — will discontinue a decades-long tradition of annual press briefings at a key gathering. “It is not clear what the overall general direction of policy will be long term,” Mossavar-Rahmani said. “Policy uncertainties generally put a little bit of a cap on the equity market.” The benchmark CSI 300 Index last month sank to a five-year low amid worries over the state of domestic demand at a time of escalating geopolitical tensions. It has since rebounded after regulators took steps to curb selling and boost institutional purchases. There may be some short-term stimulus measures coming, but China’s real estate sector hasn’t found the bottom yet, according to Mossavar-Rahmani. “Data is unclear — we really don’t have a good grasp of what growth was last year or what growth will be this year,” she also said, echoing concerns among a number of economists who doubt China’s official economic expansion figures. While China formally published a growth rate above 5% for 2023, “most people think that is not the real growth number — it was actually a lot weaker,” she said. “We don’t recommend clients move into China at this point,” she concluded. #news