China pivot converts more stock bulls, rally saps short-term upside: BofA survey
A surge in Chinese stocks has sapped the market’s upside potential over the next six months, a Bank of America survey showed
Money managers in Asia-Pacific have become more optimistic on China’s outlook amid mounting expectations for stronger policy easing after Beijing’s massive stimulus, according to a Bank of America survey. They have put more money in Chinese assets and trimmed allocations in India.
A net 61 per cent of fund managers expect the world’s second-largest economy to get stronger over the next 12 months, according to the US investment bank, versus negative 35 per cent previously. As a result, the outlook for Asia-Pacific also rose to a 20-month high, it added.
“Growth expectations for China sprung back to life following the policy pivot,” the bank said in a report on Tuesday. Participants believe “this time is different” as they refocus on China for fresh opportunities, believing that Chinese households will boost discretionary spending and investment, the report showed.
The bank surveyed 128 regional fund managers overseeing US$273 billion of assets from October 4 to 10.
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Wild swings in Hong Kong and mainland China stock markets
China unveiled a massive stimulus package on September 24 to revive the economy and rescue the stock and property markets after prices slumped this year to multi-year lows. The pivot helped power a bull market, restoring more than US$3 trillion of value in Chinese stocks traded in Shanghai. Shenzhen, Hong Kong and New York.
The MSCI China Index, which tracks over 700 companies listed at home and abroad, has risen 19 per cent in the past month, while stocks in Hong Kong have advanced 20 per cent in an uneven and shaky performance.
