Global hedge funds added Chinese domestic stocks, ADRs in July, Goldman says
- China’s valuations are at the lower end compared with global markets and have underperformed both developed and emerging markets, said Goldman Sachs analysts
A report from investment bank Goldman Sachs over the weekend said hedge-fund managers added to their holdings of Chinese stocks in July without providing specifics of the purchases. Still, hedge funds’ allocations to yuan-denominated stocks and American depositary receipts (ADRs) remain close to five-year lows, it said.
In a broader measure of overseas inflows into Chinese domestic stocks, foreign traders including hedge funds and mutual funds, invested US$500 million through the northbound investment route under the cross-border exchange link programme last month, according to the report.
China’s valuations are at the lower end compared with the global markets, said Goldman Sachs analysts, adding that MSCI China has corrected 13 per cent since its recent peak in May, underperforming developed markets and emerging markets by 12 per cent and 11 per cent, respectively, in the last three months.
The recovery in demand for Chinese stocks reflected increased bets by foreign investors that Beijing would be more attentive to economic growth in the short term. In both in the third plum and the Politburo meeting convened by the Communist Party last month, top leaders stressed how to achieve the growth target of around 5 per cent this year and also pledged to spur household consumption as the top priorities.
