Chinese stocks, once indispensable to global funds and later deemed uninvestable by others, are back on the radar of investors after years of being ignored. While caution remains, optimism abounds after a US$4.5 trillion rally in the past month.
That is the assessment of Kinger Lau, a managing director in Hong Kong and chief China equity strategist at Goldman Sachs. He has been “running around the world” over the past four weeks, fielding questions since China unleashed its surprise stimulus package on September 24.
“I have been getting a lot of emails, with 60 or 70 per cent [of them] starting with the phrase ‘long time, no talk, no see’,” he said in an interview. “For some investors who haven’t really looked at China over the past one to two years, certainly, the interest level has picked up a lot.”
Benchmark equity indices in mainland China, Hong Kong and New York have risen by 12 to 23 per cent over the past month as global funds piled in. That has restored some US$4.5 trillion of value in the market, according to Bloomberg data. Lau said this may hasten bigger fund inflows.
To emphasise his point, Lau said he and his team held “35 meetings over five days” with various investors on a recent marketing trip to the US.
“What has happened is really the ‘policy put option’ has been activated,” Lau said, referring to bets that Beijing will do whatever it takes to rescue the market. “I’m not saying everyone is buying. But the level of interest has picked up a lot, very much consistent with the flows and positioning.”
