Just-in! Global Funds Bought $24.385 Billion of Chinese Assets

Goldman Sachs has released a new report about global funds flow, which shows that in the four weeks ending October 30, global funds netted a total of $63.628 billion into the stock market. Among them, the US market received a net inflow of $37.228 billion; the A-share market received a net inflow of $24.385 billion. Japan's and India's markets had net outflows of $6.063 billion and $284 million, respectively.

 

 

In a report released earlier, Goldman Sachs strategists predicted that Chinese stocks would rise 2-3 months after the US presidential election. But they also warned that the market could have a subconscious reaction if former President Donald Trump won.

 

The bank's analysts wrote in the report: “Chinese equities have not sold off during the Trump risk repricing period over the past two weeks, suggesting their resilience. We believe Chinese risk sentiment can turn bullish after the election.”

 

 

Analysts at Goldman Sachs said valuations of Chinese equities remained below historical averages. Earnings could improve. However, global investor positions remained low. Goldman Sachs also noted that emerging market funds have been increasing their exposure to China and North Asia over the past month, which could grow rapidly once the election results lift the market uncertainty.

 

Echoing the bullish news released by Goldman Sachs, Chinese assets showed good gains. On November 4, as of the A-share close, the Shanghai Composite Index rose 1.17%, returning to the mark of 3,300 points. The Shenzhen Component Index soared 1.99%. The GEM index surged 2.93%. The robotics, big finance, electric vehicles, and big consumption sectors led the rise.

 

 

On the same day in the U.S. market, US-listed Chinese stocks rose against the trend. As of the close, the Nasdaq Golden Dragon China Index rose 1.1%, once jumping over 3%. Yum China soared more than 7%. Xpeng, Trip Group, and Vipshop were top gainers.

 

 

For the rise of Chinese stocks, China Merchants Securities and CITIC Securities both believed that the stimulus signals promoted the rise. Zhang Xia, chief strategy analyst at China Merchants Securities, said because a series of policies supporting economic growth were expected to come, the market should have a more positive attitude. With the emergence of further economic improvement signals, the market may have a more sustainable upturn.

 

CITIC Securities said the market was driven by a combination of policy signals, external signals, and price signals. The policy will happen but not immediately in November. The U.S. election landing will not change the A-share upward movement but impact the market structure greatly. Though China's economic indicators have improved significantly, the turning point of price signals is still unclear. In addition, the current surge in theme stocks and ETF accelerated the speed of active institutional management clearing long positions, leaving the main institutional investors a larger space to increase positions in the future. After the price signal is clear, performance stocks will have a great buying point.