{"id":36449,"date":"2023-10-26T21:24:54","date_gmt":"2023-10-26T21:24:54","guid":{"rendered":"https:\/\/prosfunds.com\/news\/chinas-big-policy-moves-draw-cautious-investors-back-to-beat-down-stock-market\/"},"modified":"2023-10-26T21:24:55","modified_gmt":"2023-10-26T21:24:55","slug":"chinas-big-policy-moves-draw-cautious-investors-back-to-beat-down-stock-market","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=36449","title":{"rendered":"China’s big policy moves draw cautious investors back to beat-down stock market"},"content":{"rendered":"
\n

By Samuel Shen and Ankur Banerjee<\/p>\n

SHANGHAI\/SINGAPORE (Reuters) -Investors are making a tentative return to China’s beaten-down stock markets as the government opened the stimulus taps, including pressing a national fund for support, but they remain mindful the economy and sentiment are still fragile.<\/p>\n

China’s benchmark CSI300 Index staged a moderate rebound from 4-1\/2-year lows this week, after state fund Central Huijin Investment started buying exchange-traded funds (ETFs) on Monday, adding substance to the central bank’s pledge over the weekend to fend off financial risks. <\/p>\n

Investors were also excited by Tuesday’s approval of an additional 1 trillion yuan ($136.76 billion) of sovereign bond issuance.<\/p>\n

Drawing investors back into China’s $10.5 trillion stock market, particularly the foreign buyers that have fled in droves this year, would stem further slides in a market which fell to its lowest since 2019 earlier this week. <\/p>\n

The policy efforts could also halt capital outflows and ease the yuan’s depreciation and a stronger market could help fund a rejuvenation of the world’s second-largest economy. <\/p>\n

The fiscal stimulus “is injecting some confidence to an extremely pessimistic market that saw no hope in the economy,” said Huang Yan, fund manager of Shanghai QiuYang Capital Co.<\/p>\n

QiuYang added some positions this week for short-term bets, but remained defensive as “the market needs time to find bottom”, Huang said.<\/p>\n

Still, the rebound in China stocks was modest and trading remained thin, underlining Beijing’s challenge in reviving confidence dented by a stop-go economic recovery, a deepening property crisis, and heightened geopolitical tensions. <\/p>\n

Huang is also wary of another selloff since further falls in stock prices could force leveraged investors to sell when they face margin calls. <\/p>\n

The CSI300 index is down 18% from its peak this year in January while China’s currency is down nearly 6% so far in 2023.<\/p>\n

This weekend the government gave a clear sign of market support when People’s Bank of China Governor Pan Gongsheng said China would prevent risk contagion in the stock, bond and foreign exchange markets, and ensure stability.<\/p>\n

“China’s central government is endorsing the stock market,” said Qi Wang, chief investment officer of UOB Kay Hian’s wealth management division in Hong Kong.<\/p>\n

“We see tactical opportunities” over the next few months, he said, citing some improvements in China’s economy, the Sino-U.S. relationship, and fresh stimulus. But “I dare not say we are already at the bottom.” <\/p>\n

Enlisting Huijin underscored the Chinese government’s seriousness about propping up the market after earlier piecemeal measures such as a cut in the stamp duty, reductions in trading fees, short-selling restrictions and curbs on share sales by listed companies’ large shareholders.<\/p>\n

That support showed in markets this week as several ETFs, including the PB CSI 300 ETF and E Fund CSI300 Index ETF saw heavy inflows after Huijin announced its purchases in a statement, adding it would continue to do so.<\/p>\n

China Asset Management Co (AMC) said Huijin bought an estimated 10 billion yuan ($1.37 billion) of ETFs on Monday, and continuous buying would “effectively ease liquidity shortage and help stabilise markets.”<\/p>\n

Huijin last bought ETFs during the 2015 stock market crash, and during the money market liquidity crunch in 2013. “The Shanghai stock indices were higher by more than 20% in three months both times”, analysts at Singapore’s United Overseas Bank (OTC:) wrote.<\/p>\n

Even without the policy moves, some overseas investors are slowly coming back to Chinese stocks. <\/p>\n

UK-based M&G Investments, which manages about $385 billion for individual and profession investors, is adding to its Chinese investments and likes sectors including automotive, renewable and shipping, said Fabiana Fedeli, M&G’s global CIO for equities, multi-asset, and sustainability.<\/p>\n

“We do find opportunities in China, and opportunity is created by the fact that this market has been unloved for some time,” Fedeli said.<\/p>\n

Still, China’s stock markets have to overcome earlier heavy selling from foreigners, burnt by Xi’s previous crackdowns on internet companies and other sectors, and its earlier stringent zero-COVID policy. <\/p>\n

Goldman Sachs estimates forex outflows from China rose to $75 billion in September, 80% higher than in August and the biggest monthly amount since 2016. <\/p>\n

($1 = 7.3149 renminbi)<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By Samuel Shen and Ankur Banerjee SHANGHAI\/SINGAPORE (Reuters) -Investors are making a tentative return to China’s beaten-down stock markets as the government opened the stimulus taps, including pressing a national fund for support, but they remain mindful the economy and sentiment are still fragile. China’s benchmark CSI300 Index staged a moderate rebound from 4-1\/2-year lows […]<\/p>\n","protected":false},"author":1,"featured_media":3824,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[38],"tags":[],"class_list":{"0":"post-36449","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"\nChina's big policy moves draw cautious investors back to beat-down stock market | Prosfunds<\/title>\n<meta name=\"description\" content=\"By Samuel Shen and Ankur Banerjee SHANGHAI\/SINGAPORE (Reuters) -Investors are making a tentative return to China's beaten-down stock markets as the\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/prosfunds.com\/?p=36449\" \/>\n<meta property=\"og:locale\" content=\"en_US\" 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