Negativity is showing signs of shifting as money managers stop or slow cuts to their exposure
Investor negativity on China is showing signs of shifting as money managers stop or slow cuts to their exposure, even if they see a durable bullish tilt in the market or sentiment as distant.
China’s blue-chip CSI 300 Index is down 4.5% this year and hit a 10-month low this week, but has steadied on support levels at around 3,700. “The problem at the moment is that portfolio managers’ perceptions are in this painful transition phase -- they have suffered too many full storms on a recovery in Chinese equities, which are ultimately disappointing,” said Alex Redman, chief equity strategist at CLSA.To be sure, the country’s beleaguered property sector, for one, remains a huge overhang, with major developers like Country Garden and Sino-Ocean teetering close to default.
“The market is likely to have long-term upward momentum only when the economy stabilizes, corporate earnings recover, and foreign investor sentiment toward China assets improves meaningfully.”Others have meanwhile sought out opportunities in markets outside of China, but that trend is showing signs of ebbing. A rush of money into India, for example, slowed in August.
Patrick Garvin, product director of Asian and emerging markets equities at Invesco, is also sticking to his China position, but beginning to think about catalysts for gains.
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