Fund managers want Beijing to do more to keep the US$380 billion rally in Chinese and Hong Kong stocks going
- Investors will shift their focus to China’s economy and corporate earnings after the excitement about the bailout measures fades, Pictet and Saxo say
- Hopes for more follow-through rescue measures are rising among investors after Beijing named a new markets watchdog
China will have to do more to convince stock investors about the sustainability of the market rally spurred by recent rescue measures after some US$5 trillion of value had been erased over the past three years, according to fund managers.
The measures aimed at propping up stocks alone are insufficient to sustain the rally that has led to the recovery of a combined US$377 billion of capitalisation on markets in the mainland and Hong Kong last week, according to Pictet Asset Management and Saxo Market.
Investors will shift their focus to the economy and corporate earnings after the excitement about these bailout measures fades, they said.
“In this delicate scenario, it may be advantageous to remain nimble and flexible,” said Redmond Wong, a strategist at Saxo Markets in Hong Kong. “Short-term traders can find opportunities amid volatility. The stocks of state-owned enterprises and large caps will benefit from the [state] buying. Meanwhile, longer-term investors may await clearer signals on [the policy front].”
The CSI 300 Index of onshore stocks climbed 5.8 per cent last week and the Hang Seng Index advanced 1.4 per cent after China’s sovereign wealth fund boosted buying of exchange-traded funds and the securities regulator pledged to slap harsh punishments for trading misconduct and imposed new curbs on short selling.
