December 9, 2022

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China Investors Look for Turning Point After $370 Billion Rally

2 min read

(Bloomberg) — With Chinese markets prone to sharp turning points followed by long and powerful trends, timing when to buy is almost as important as choosing what to purchase.

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Investors who jumped into Chinese stocks on Nov. 11 when Beijing cut Covid-19 quarantine periods and dialed back testing have shared in a rally that’s added almost $370 billion to the value of equities in the MSCI China Index.

Others are still waiting for clearer signals after Wall Street got it so wrong this time last year. Goldman Sachs Group Inc., JPMorgan Chase & Co. and BlackRock Inc. were among those who recommended piling into the market then, only to see more than $4 trillion in value destroyed over the 10 months through October.

“Chinese policies are like a giant freight train coming down the track,” said John Lin, a fund manager for China equities at AllianceBernstein in Singapore. “What you do first is get out of the way. Don’t stay on the track! Then the instant that you can, jump onto the train.”

China’s benchmark CSI 300 Index has risen about 8% from this year’s low set in late October even as Covid cases have been rising. Daily infections climbed above 30,000 for the first time Thursday as officials struggle to contain outbreaks that have triggered new restrictions in some of the largest cities.

Ahead of Curve

Abrdn Plc is among those who already see opportunities in the nation’s corporate bonds after the Covid policy changes and a sweeping package of measures to aid the property sector.

Investors can also position right away to take advantage of a likely steepening in China’s government bond yield curve as the economy reopens from Covid, according to Ray Sharma-Ong, a fund manager for multi-asset and investment solutions at abrdn.

“Go along on the front-end of the curve while going short on the back-end,” Sharma-Ong said. A better outlook for growth will push up back-end rates, while China’s supportive monetary policy…

2022-11-25 04:30:00

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