A series of recently disclosed data shows that global funds are increasing their allocation of Chinese assets. The latest data from Goldman Sachs Group's prime brokerage department shows that hedge funds bought stocks net in various regions around the world last week, with net purchases of Chinese stocks continuing for four weeks. In addition, in its latest stock strategy report, Goldman Sachs raised its 12-month target for the Shanghai and Shenzhen 300 Index from 3900 points to 4100 points, maintaining an "overweight" rating on A-shares. Multiple institutions have stated that the continuous fluctuations in overseas markets and the gradual improvement of China's economic fundamentals are the main reasons for attracting foreign investment to return.
Data shows that as of May 20th, northbound funds have been net buyers for four consecutive months since February. Since the beginning of this year, the total net buying amount of northbound funds has reached 93.181 billion yuan, exceeding the net buying amounts of 90.02 billion yuan in 2022 and 43.7 billion yuan in 2023.
The recently disclosed US 13F documents show that in the first quarter of this year, multiple asset management giants have significantly increased their holdings in Chinese concept stocks. Specifically, Singapore's sovereign wealth fund Temasek Fund built KraneShares China Overseas Internet ETF (KWEB) with more than 1.5 million positions in the first quarter. As of the end of the first quarter, Temasek held 9.2 million shares of Alibaba stock, 301400 shares of Baekje Shenzhou stock, and 3.6 million shares of JD.com stock.
Bank of America bought 5.18 million shares of JD stock in the first quarter, with a market value of 180 million US dollars in its holdings; Purchase 2.91 million shares of Pinduoduo stock, with a market value of 474 million US dollars held; Purchased 5.86 million shares of Alibaba stock, with a holding market value of 715 million US dollars.
Michael Barry, a well-known fund manager on Wall Street, managed a hedge fund that increased its holdings of 160000 JD stocks and 50000 Alibaba stocks in the first quarter of this year. As of the end of the first quarter, the two stocks accounted for 9.53% and 8.74% of their respective portfolios.
Appaloosa, an asset management firm founded and managed by hedge fund magnate David Tepper in the United States, bought a significant 6.9 million shares of Alibaba in the first quarter, increasing its holdings by more than double. After increasing its holdings, Alibaba became the largest heavy holding stock in its $6.7 billion stock investment portfolio, accounting for 7.39%. In addition to Alibaba, the fund also increased its holdings of 1.32 million shares of Pinduoduo and 1.17 million shares of Baidu in the first quarter. As of the end of the first quarter, these two stocks accounted for 3.61% and 2.81% of its investment portfolio, respectively.
Regarding the large-scale sweep of foreign investment, Liu Hui, senior fund manager at Jingshun Investment, analyzed that the fluctuations in US and Indian stocks in the early stage, as well as the significant depreciation of the Japanese yen, have led foreign investors to consider diversifying their investments into other markets and starting to increase their allocation of Chinese stocks.
"We have seen positive signals from three perspectives: economic fundamentals, policy, and liquidity. We believe that although there may be short-term fluctuations, the trend of net inflows of northbound funds is expected to continue in the medium term," said Zhu Bingqian, Chief Strategist at Luboma Fund.
From a liquidity perspective, Zhu Bingqian stated that against the backdrop of significant depreciation of the Japanese yen and rising volatility of overseas assets, A-shares and Hong Kong stocks, which possess characteristics such as Chinese assets, valuation advantages, and global liquidity sensitive assets, have been boosted by the "liquidity spillover" effect.
On the reason why China's Internet leaders are favored by asset management giants, Liu Hui said that the improvement of fundamentals and policies, together with the relatively low valuation in history, are the reasons why they have attracted additional positions: on the one hand, Internet business, especially e-commerce, has a strong correlation with economic recovery, and the recovery of China's macro-economy and consumption has a direct role in promoting the improvement of Internet companies' fundamentals; On the other hand, the stock prices of Chinese Internet companies continued to retreat in the past few years, and the current valuation is at a relatively low historical level.