2024.9.30 15:34
Last week, Chinese assets rose across the board. The RMB has appreciated sharply. A-shares, Hong Kong stocks, and Chinese concept stocks have surged. Hedge funds have poured in first, and long-term funds may have to increase their positions in the future. Global funds have fully increased their positions in Chinese stocks. Choice data shows that last week, the net inflow of stock ETFs exceeded 55 billion yuan, and the net inflow of main funds in the Shanghai and Shenzhen stock exchanges exceeded 34 billion yuan.
Image source: Zitu.com
The total market value of A-shares increased by more than 10 trillion yuan. In the A-share market, the Shanghai Composite Index, Shenzhen Composite Component Index, and GEM Index rose by 12.81%, 17.83%, and 22.71% respectively. The total market value of the A-share market increased from 74.58 trillion yuan to 84.70 trillion yuan, a single-week increase of 10.12 trillion yuan. In the Hong Kong stock market, the Hang Seng Index, Hang Seng China Enterprises Index, and Hang Seng Technology Index rose by 13.00%, 14.39%, and 20.23% respectively. FTSE China A50 Index futures rose more than 20% last week. The top ten Chinese concept stocks on the Nasdaq by market value surged, with many stocks rising by more than 30%. The trend was much stronger than the growth of the Nasdaq index during the same period, and the Chinese stock market rebounded sharply.
With the total turnover of the A-share market exceeding 1.1 trillion yuan for two consecutive days, market sentiment may have reached the highest level in the past year. Goldman Sachs' overseas traders mentioned it on a client call.
Domestic and foreign investors have significantly increased their positions in Chinese stocks. Cash inflows are reflected in three themes. The first is high dividends like banks and non-ferrous metals. For example, there is a significant inflow into hedge funds of small and medium-sized banks and Concentrate long-term funds invested in non-ferrous metals. Second, Growth stocks, mainly battery and GEM heavyweight stocks, such as CATL. Lastly, Consumer stocks with liquor and home appliances as the main components. Short covering funds flowed into Moutai. Moutai is also the most bought stock by hedge funds on the A-share trading desk.
On the afternoon of September 26, the Political Bureau of the Central Committee of the Communist Party of China proposed to “promote the real estate market to stop falling and stabilize”, which boosted market sentiment. Institutional insiders believe that this is the first time in many years that the Politburo meeting has clearly stated policy requirements related to the operation of the real estate market, further stimulating the market to rise. The Shanghai Composite Index rose 3.61% on the day, breaking through the 3,000-point mark in one fell swoop.
Amundi Investment Research Institute said it will benefit from the policy change. If the real estate market can be gradually stabilized and household expectations improved, it will further help the stock. Short positions on the yuan are recommended to be reduced to neutral, as speculation of higher growth and inflation are increasing amid expectations of fiscal stimulus, which should help stabilize the currency. However, once the US election finishes, it should become an important part of investors' investment plans. External risks still need to be paid attention to. The key is whether a strong fiscal stimulus package can be launched.
Unexpected policy support measures will improve investor sentiment and market liquidity, which is expected to drive a rebound in both onshore and offshore markets. China needs to solve many structural problems by introducing well-thought-out policies, Especially in stabilizing the real estate market, which has been shrinking for four consecutive years. The Politburo meeting pointed out that “countercyclical fiscal policy” is necessary.
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