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CHINA: Market Views Diverge on Direction for Chinese Assets

CHINA
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Amid the ongoing Financial Leaders' Summit in Hong Kong, the relative investability of Chinese assets has been a firm focus among both the sell- and buy-side following the unrolling of stimulus and US election. Regulators and the central bank have been out in full force with a view to opening up China further to foreign investment - which is meeting differing views on the street.

  • Goldman Sachs' Chief Econ stated that investors remain "predominantly on the sidelines" over deploying capital in the country, with weak local consumer confidence and difficulty in moving money out of the country hindering investment. Morgan Stanley's CEO, meanwhile, sees some green shoots, but stressed the need for greater transparency in regulations and policy-making.
  • Both GS and MS downgraded their views for Chinese equities in the past week or so, with MS reducing stocks to underweight, while GS cut their MSCI China Index target to 75 from 84 and cut HK equities to underweight.
  • Oaktree Capital Management's co-founder, however, claimed some assets in China are available at "bargain" prices, deeming comments that China is uninvestable as "music to my ears". Separately, Fidelity International's Efstathopoulos is targeting onshore, mid-cap Chinese stocks to build on the gains generated from the recent stock rally. Robeco similarly see bottom-up opportunities for attractively priced equities in China.
  • Notably, Citi last week upgraded their '24 China growth view to 5.0%, citing the recent policy push.
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Amid the ongoing Financial Leaders' Summit in Hong Kong, the relative investability of Chinese assets has been a firm focus among both the sell- and buy-side following the unrolling of stimulus and US election. Regulators and the central bank have been out in full force with a view to opening up China further to foreign investment - which is meeting differing views on the street.

  • Goldman Sachs' Chief Econ stated that investors remain "predominantly on the sidelines" over deploying capital in the country, with weak local consumer confidence and difficulty in moving money out of the country hindering investment. Morgan Stanley's CEO, meanwhile, sees some green shoots, but stressed the need for greater transparency in regulations and policy-making.
  • Both GS and MS downgraded their views for Chinese equities in the past week or so, with MS reducing stocks to underweight, while GS cut their MSCI China Index target to 75 from 84 and cut HK equities to underweight.
  • Oaktree Capital Management's co-founder, however, claimed some assets in China are available at "bargain" prices, deeming comments that China is uninvestable as "music to my ears". Separately, Fidelity International's Efstathopoulos is targeting onshore, mid-cap Chinese stocks to build on the gains generated from the recent stock rally. Robeco similarly see bottom-up opportunities for attractively priced equities in China.
  • Notably, Citi last week upgraded their '24 China growth view to 5.0%, citing the recent policy push.