Premia Partners’ Post

Extremely negative sentiment culminating Q4 2023 toward Chinese stocks have brought A shares to exceedingly low valuations for an economy with so much inherent growth potential, that it would appear the upside risks far outweigh the downside risks at this point. Meanwhile we see differentiating features of the bedrock and new economy indices including factors tilting toward bargain stocks and high-quality growth at a reasonable price, along with a concentration in strategic sectors that truly drive China’s real economy. In this article, Dr. Phillip Wool, Global Head of Research of Rayliant Global Advisors reviews the factor performance of the onshore A-shares markets in Q4 2023, and reasons why investors may look back at 2024 as a turning point for China’s equity markets, and outstanding entry point for a vintage well positioned for growth recovery in the new normal. #Premia #china #ashares #chinaneweconomy #qualitygrowth #multifactor #factorinvesting #value #growth #smartbeta

𝗖𝗵𝗶𝗻𝗲𝘀𝗲 𝗦𝘁𝗼𝗰𝗸𝘀: 𝗔 𝗗𝗿𝗮𝗴𝗼𝗻'𝘀 𝗧𝗮𝗹𝗲 𝗼𝗳 𝗪𝗼𝗲... 𝗼𝗿 𝗢𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝘆? Just when you thought the rollercoaster ride of global markets couldn't get any wilder, China decides to throw us another loop! A series of downgrades from major financial institutions, coupled with weak earnings reports, paint a complex picture of the world's 2nd-largest economy. 𝗝𝗣𝗠𝗼𝗿𝗴𝗮𝗻, 𝗼𝗻𝗰𝗲 𝗯𝘂𝗹𝗹𝗶𝘀𝗵 𝗼𝗻 𝘁𝗵𝗲 𝗗𝗿𝗮𝗴𝗼𝗻, 𝗵𝗮𝘀 𝗷𝘂𝘀𝘁 𝗷𝗼𝗶𝗻𝗲𝗱 𝗨𝗕𝗦 𝗮𝗻𝗱 𝗡𝗼𝗺𝘂𝗿𝗮 𝗶𝗻 𝗱𝗼𝘄𝗻𝗴𝗿𝗮𝗱𝗶𝗻𝗴 𝗖𝗵𝗶𝗻𝗲𝘀𝗲 𝘀𝘁𝗼𝗰𝗸𝘀. This shift is attributed to: * Potential "Tariff War 2.0" looming (60% tariffs? Ouch!) * "Underwhelming" policy support for economic growth * Structural headwinds that would make even the Great Wall of China seem small 𝗧𝗵𝗲 𝘁𝗲𝗰𝗵 𝗴𝗶𝗮𝗻𝘁𝘀?China's tech giants, long considered the backbone of the country's stock market performance, are showing signs of strain: the top eight tech firms reported their slowest EPS growth since Q4 2022. PDD Holdings experienced a significant $55 billion market value loss in a single session. Companies like Kuaishou Technology and Baidu have raised concerns about consumer economy health. 𝗕𝗮𝗻𝗸𝗶𝗻𝗴 𝘀𝗲𝗰𝘁𝗼𝗿? Chinese banks are facing unprecedented challenges: interest rates are falling, putting pressure on net interest margins; loan demand is depressed, further squeezing profitability and banks' margins have been driven to record low levels. The sector is grappling with the ongoing real estate crisis, potentially leading to increased non-performing loans. There are concerns about the banks' ability to support economic growth while maintaining their own financial health. The MSCI China Index has declined over 13% from its May peak. The CSI 300 Index is down 5.2% year-to-date, potentially facing an unprecedented fourth straight annual decline. 𝗕𝘂𝘁 𝘄𝗮𝗶𝘁! 𝗣𝗹𝗼𝘁 𝘁𝘄𝗶𝘀𝘁: 𝗖𝗵𝗶𝗻𝗲𝘀𝗲 𝘀𝘁𝗼𝗰𝗸𝘀 𝗮𝗿𝗲 𝘁𝗿𝗮𝗱𝗶𝗻𝗴 𝗮𝘁 𝗮 𝗳𝗼𝗿𝘄𝗮𝗿𝗱 𝗣/𝗘 𝗼𝗳 𝟴𝘅 𝗰𝗼𝗺𝗽𝗮𝗿𝗲𝗱 𝘁𝗼 𝘁𝗵𝗲 𝗨𝗦 𝗮𝘁 𝟮𝟰𝘅. Amidst the above challenges here lies a striking contrast. The valuation gap between Chinese and US stocks raises important questions about potential opportunities and risks in the Chinese market. Does the current valuation represent an unparalleled opportunity, or does it reflect the market's accurate assessment of China's economic challenges?

China stocks tumbled on Tuesday after Moody's outlook downgrade on the country deepened investors' economic fears📉 China's benchmark CSI 300 stock index tumbled 1.9% to fresh four-year lows Tuesday, hitting its lowest level since February 2019 following the downgrade of the country's credit outlook.📊 The Hang Seng China Enterprises Index also declined 1.6% Tuesday to its lowest since November 2022., and the MSCI China index fell more than 2% to its lowest since November 2022. Moody's pointed to Beijing's use of fiscal stimulus to prop up local governments — the country's on track for record bond issuance in 2023 — and a worsening real estate crisis as risks to stability.💵 "The outlook change also reflects the increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the property sector," the ratings agency said. Full story on Business Insider: https://lnkd.in/esJSxi94 #china #chinaeconomy #markets #stocks #investors #moodys

Global markets have seen upwards movement overnight following data released in China revealing it's industrial profits soared in November to rise 29.5% YoY, helped by favorable year-ago comparisons, a raft of stimulus measures aimed at reinvigorating an economy that has struggled with deflationary concerns and large investment returns with further boosted bottom line. Our XJO is expected to open around 30 points higher. This level is a fraction off the all-time high for our market, and it looks like we could record a new high in the coming days.

Foreign investors lukewarm on China stocks despite Fed rate cut buzz https://ift.tt/8HUAlhO Markets Foreign investors lukewarm on China stocks despite Fed rate cut buzz Property worries persist, but some say worst is over for Chinese markets An electronic board shows stock indexes in Shanghai's financial district.   © Reuters ECHO WONG, Nikkei staff writerSeptember 13, 2024 13:17 JST | China HONG KONG -- Investors are positioning for a potential rate cut by the U.S. Federal Reserve next week, eyeing market opportunities from Japan to the Philippines. Experts say China's market, however, is less likely to benefit from a U.S. policy change as its slower-than-expected economy weighs on sentiment. After Fed Chair Jerome Powell's remarks in late August at the Jackson Hole symposium, where he signaled policy adjustments including rate cuts, market players including Goldman Sachs, Morgan Stanley and BNP Paribas expect the first move could come as soon as the central bank's Sept. 17 to Sept. 18 meeting. Most expect a cut of between 25 and 50 basis points. Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century. Celebrate our next chapter Free access for everyone - Sep. 30 Find out more Business News via Nikkei Asian Review https://ift.tt/6IXsG7v September 12, 2024 at 09:21PM

Chinese stocks previously labeled "un-investable," are now approaching bull market territory, signaling a turnaround from extreme pessimism to optimism. The technical indicators show there's more room for growth, and overseas investors are putting money back into China because of government support and signs of economic improvement. Despite fundamental and geopolitical risks, this rally presents a trading opportunity rather than a long-term investment according to LPL Research. Read more here:

As the FTSE China A50 Index celebrates its 20th anniversary, we reflect on its journey over the past two decades and how it has effectively mirrored the evolution of the Chinese economy. Recently, Mark Barnes, Head of Investment Research (Americas) at FTSE Russell, An LSEG Business, and Yufei You, Product Manager at SGX Group, collaborated on an insightful article titled “China’s evolving economy: a 20-year look back through the lens of the China A50 Index”.   In their article, Barnes and You provide a concise overview of China’s remarkable economic growth over the past twenty years. This growth has been characterised by ongoing transformation, leading to significant economic rebalancing, as highlighted in the IMF’s 2022 Staff Report. In this regard, the shifts in China’s economy are mirrored in the changes in the industry composition and classification weightings of the FTSE China A50.   As the FTSE China A50 serves as a representative index of the Chinese economy, the SGX FTSE China A50 Index Futures remains a reliable instrument for global investors seeking exposure to China. As a CFTC-approved instrument, the futures offers investors a leading offshore liquidity pool to manage their Chinese A-shares risk round-the-clock, even during holidays in Mainland China and Hong Kong. Trading volume during European and U.S. time zones (i.e., T+1 session) accounts for over 10% of the total volume.   Interested in learning more? Download the PDF article here: bit.ly/49yEBpq, or speak with us today!   #SGXEquityDerivatives #EquityDerivatives #ChinaA50 #ChinaEconomy #Derivatives #Trading

2024 could mark the beginning of a multi-year bull market of Chinese stocks. Based on: 1. Un-investible narrative & negative effects as a very worned out 45. 2. Those that need to sell have sold. Global and local institutions are way under-invested both on relative & absolute basis in Chinese stocks. Chinese stocks are cheapest among Emerging markets and Emerging markets are cheapest to USA. 3. Most that want or need to buy has been sitting on the sideline. 4. The long-term higher profit margins industrial cycle of China has just started. 5. The beneficial effects of financial market liberalisation has just started for China. 6. The adverse effects of the burst of the property bubble for past 4 years will likely end sometime in 2024. 7. The likely beginning of shift of focus of domestic household interests away from properties towards stocks, as stock market warm upward. We might see a very strong stock market if Chinese Authorities are able to restore Confidence. Igniting the Animal spirit through committed stock market interventions to reverse bearish psychology will do wonder. I look through this prolonged dark despair tunnel of past 4 years especially for HK stocks as the best risk reward stock investing setup in my 40 years professional career. I am super bullish. The Chinese are capable, flexible, great businessmen & executors. "You ain't seen nothing yet".

"“We’ve now seen 11 straight quarters of earnings misses for MSCI China and the analyst consensus hasn’t really gotten to grips with just how weak the underlying growth environment is in China,” Jonathan Garner, chief Asia equity strategist for Morgan Stanley, said Thursday. “You have to be selective to be involved in China. There’s also more competition going on, particularly in sectors like e-commerce.” Li Qiang: We hit our growth target of 5.3% GDP growth. Investors: Not seeing it in your earnings. Look, everyone knows that China is going through a down cycle, and without a large stimulus it won't rebound quickly (I am not recommending it - I am just saying that without one the economy will not rebound. With one, it is likely to rebound unsustainably). So it will likely to have weak local earnings for the listed companies with legacy customers and old product/service offerings targeting at the higher end of the market for a while yet. But hot money is impatient, as China stocks is not doing as well, so hot money is profit taking and leaving. "What analysts expect to be delivered in terms of earnings over the next two years “can only be a miracle,” CLSA’s Chief Equity Strategist Alexander Redman said in a media briefing in Jakarta earlier this month. Investors should maintain benchmark weight on Chinese stocks as their consensus earnings estimates seem too optimistic, he added."