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No love for China stocks as sell-off unites UBS, BlackRock in rearguard action against Beijing policy and regulatory hawks
- The latest regulatory squeeze on the education sector erased at least US$5.8 billion of value from 15 Hong Kong-listed tutoring firms on Friday
- UBS Wealth Management has removed its tactical preference for the market until there is clarity on the regulatory overhang
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Chinese stocks, among the world’s top laggards, are not getting back in favour any time soon for some money managers, as policy hawks in Beijing send the market into another punishing month.
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From a US$600 billion sell-off in technology stocks and a US$13.8 billion plunge in China Evergrande since February to Friday’s US$5.8 billion blow to some 15 Chinese education technology stocks, an unrelenting regulatory crackdown is forcing investors to raise their guards against more shocks this quarter.
UBS has removed its tactical preference for the market while BlackRock reiterated its neutral stance. Investors should wait for better bargains even after a benchmark for Shanghai and Shenzhen stocks has lost all its gains this year and the Hang Seng Tech Index slumped to its lowest level since early October.
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“Monetary and fiscal policy tightening is just one aspect of China’s overall hawkish policy stance, the other two being measures to stabilise property price increases and an antimonopoly clampdown,” BlackRock strategists including Wei Li said in a report last week. “The campaign has become a significant market driver. We expect this to continue.”
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