The average underweight position by global long-only managers is back to where it was before the reopening rally took off in late 2022, according to a Morgan Stanley quant analysis. Foreign funds sold about 90 billion yuan of mainland shares in August via the trading links with Hong Kong, the most in data compiled by Bloomberg going back to 2016.
“Our latest positioning data shows that underweight China is a consensus among regional funds,” Morgan Stanley strategists led by Gilbert Wong wrote in a Sept. 4 note. “Net outflows from active long-only managers on China/HK equities doubled in August versus that in July.” Beijing’s efforts to boost housing sales by lowering downpayments and loosening mortgage restrictions “is even better than our expectations,” and shows “the government is there to support the economy and will be ready to do even more if needed,” he said Friday.Castoldi’s view is shared by Damian Bird, a manager of Polen Capital’s emerging-markets growth portfolio in London.
Some bright spots are also emerging. Earnings estimates for tech stocks have been trending upward since a March low, even as those for the broader benchmarks have remained largely unchanged.For Fredrik Bjelland, who manages the emerging-market equity fund at Skagen AS, the strategy of investing in Chinese stocks remain unchanged — focusing on corporate fundamentals and finding companies that can withstand macro challenges.
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