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Despite several attempts to restore investment sentiment, professional investors remained away from China’s stock market.
Analysis of fund data shows that when Beijing intervened in its property department to resolve the bubble’s concerns with the “three red lines” rules since mid-2020, portfolio managers have steadily reduced the distribution of Chinese stocks.
Many of the repeated interventions that blame Beijing (including stimulus that suddenly increase stocks) are the main factors in their decision to exit the world’s second-largest economic stock market.
Portfolio data from 34 actively managed funds provided by Morningstar, and examined by CNBC, shows that the allocation to Chinese and Hong Kong listed stocks has declined every year over the past five years.
For example, the HSBC Bank custodial growth fund invested nearly one-fifth of its stocks in China and Hong Kong in 2020. By the second half of 2024, the fund’s allocation to China has dropped to 3.4%. HSBC declined to comment.
CNBC has only analyzed funds actively managed in Hong Kong with geographic unrestricted authorizations such as pan-Asian stocks or emerging market funds.
HSBC custodial growth fund reduces its exposure to China to negligible levels
Think about it Pando CMS Innovation ETF,release 80% return in 2024. The fund’s previous position in Chinese companies ended due to investors’ frustration with stocks, largely due to the government’s fundamental policy.
Yili Yan, investor relations director at Pando Finance, told CNBC in January from Hong Kong.
“We understand, but we don’t know when the policy will break into the market,” Yili added. “We want to accept certainty about uncertainty.”
ETFs sold out three Chinese companies they previously held Tencent,,,,, Alibaba and Meituanbut bought our stocks Tesla And AI chips, my dear Broadcom.
“We sold them in the second quarter of 2024, and it’s not because we don’t like them – they’re very good companies – we’re like The same is true for AI stocks.”
Other investors in the region recently sold out China-related investments and they regretted that they didn’t sell them early.
“We’ve reduced exposure, although you should sell everything,” Wong Kok Hoi, chief investment officer at APS Asset Management in Singapore told CNBC.
Can any stimulus be measured?
Last September, Beijing formulated a series of stimulus measures These include lowering key short-term interest rates. Interest rates on existing mortgages have also been lowered to boost the country’s embattled real estate sector. this Initial meeting After the announcement, the country’s benchmark CSI 300 has been splashed out significantly.
In the past January, China’s financial regulators launched A series of initiatives As the government works to strengthen the stock market, major state-owned mutual funds and insurance companies are encouraged to buy more stocks.
Instructing large state-owned insurance companies to expand their investments and share in listed stocks, 30% of their new premium Specially used to buy stocks.
Adam Coons, chief investment officer of U.S.-based Winthrop Capital Management, welcomed the measures, but suggested the company might be cautious about future investments in China.
“Policies absolutely push stock prices rather than fundamentals. The economy shows signs of deflation, and economic growth is only due to government stimulus.” “We can be late for the recovery of Chinese stocks to help us alleviate this,” Coons said. Recovery is not a real risk.”
Investors also believe that Beijing’s recent announcements could have a greater impact than previous measures of half-heartedness.
“I’m not going to invest a lot of stocks, ‘I’m not going to buy the Chinese stock market because the authorities want it to go up,’ because in the end, I think that’s not going to work,” chief strategist for the U.S.-based hedge fund emerging sovereign group. Brian McCarthy is a regular traveler in China.
“Your authorities are trying to fight fundamentals everywhere like the authorities, but in China, they are especially powerful.”
Others also pointed out that investors lack understanding and misunderstanding of Chinese government policies.
“It is undeniable that China’s policies have played an important role in affecting short-term stock price movements, which has been seen in recent improvements in market sentiment following active interventions,” said Brian Arcese, fund manager at Foord Asset Management. “But, We also observe a disconnect between investor expectations and the approach of Chinese policymakers.”
“While the government tends to provide directional guidance, investors often seek quantifiable goals and detailed implementation plans, which can create uncertainty and impact market sentiment,” Arcese added.
“We believe that in the long run, the fundamentals of the company remain the main driver because sustained growth and performance ultimately depend on the strength of the basic companies and their ability to adapt to the economic situation.”
