No holding back on Chinese stocks as hedge funds buy while BlackRock says market is unprepared for nasty surprises
- The CSI 300 Index fell in the first quarter in seven of the past 10 years, with 15 per cent in 2022 being the worst of the losses
- The bullish start to 2023 suggests global funds are undeterred by any potential short-term pain
The CSI 300 Index of industry leaders has risen 8 per cent this year, backed by a chorus of bullish calls from strategists at Wall Street banks. China’s zero-Covid pivot from late November has lifted many of yesteryear’s losers, while global funds are buying local equities at a record pace this month.
“Risk appetite is coming back as the policy fronts continue improving at home and abroad,” said Lu Bin, chief investment officer at HSBC Jintrust Fund Management in Shanghai. “Consumer demand and property market conditions are expected to improve and corporate earnings will probably bottom out.”
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Such optimism is built on expectations that China’s economic recovery will gather pace. Goldman Sachs raised its 2023 growth forecast to 5.5 per cent from 5.2 per cent, after reports showed activity in December was not as bearish as feared. The CSI 300 Index still has another 8 per cent upside this year, the US bank said in a report on January 20.
