Various signs indicate that as China's capital market shows a hot rise, Wall Street analysts across the ocean are increasingly feeling the "big deal" of this stimulus policy.
For example, Scott Rubner, a technical strategy analyst at Goldman Sachs, lamented in a report on Thursday that "I have held more China investment themed video conferences in the past 48 hours than in the entire year of 2024". Lubner said that investors are increasingly feeling the panic of missing out on this wave of Chinese market trends. Goldman Sachs analysts also stated that investors are increasingly inclined to believe that the current round of gains "may not fade away".
As of the close of this Friday, the Shanghai Composite Index has risen for the 8th consecutive day, from a low of 2689 points on September 18th to 3087 points. The Shanghai and Shenzhen 300 Index surged 15.70% this week, which is also the strongest week since 2008 according to statistics. The Nasdaq Golden Dragon Index, a Chinese concept stock index more familiar to overseas investors, rose 23% over the same period, and the Hang Seng Technology Index also rose nearly 26%.
(NASDAQ Golden Dragon Index daily chart, source: TradingView)
Barclays also shares a similar view with Goldman Sachs. The head of Asia cross asset strategy at the bank, Kaanhari Singh, also reiterated his preference for Chinese assets this week, while emphasizing that he is more optimistic about China compared to the Indian market.
The Singh team believes that these stimulus measures may substantially boost China's GDP growth in the next two years. The Barclays team emphasizes that this event could be significant.
For overseas institutions, the soaring rise in Chinese assets this week also exposes the risk of their asset allocation strategies missing out on this round of global attention opportunities.
According to statistics, before the rise in Chinese assets this week, hedge funds' investment positions in Chinese stocks were below 7%, the lowest level in nearly 5 years. Mutual funds only have 5.1% of their holdings in Chinese assets, which is also the lowest 1% percentile in the past decade.
More importantly, even though the MSCI China Index outperformed the global market by 15% this week (the highest since 2007!), the rolling price to earnings ratio of the China Index is still only 9.4 times, which is still considered a "very cheap" level in history. From the trading enthusiasm in the market, the trading volume of the Shanghai and Shenzhen 300 Index in recent days is still far behind that of 2014.
In the view of Michael Hanett, Chief Investment Strategist at Bank of America, this wave of stimulus from China may have opened up a widespread investment boom - funds will flood into stocks, emerging markets, and commodity markets outside the United States.
In a report released on Friday, Hanett wrote, "Assets that were once neglected - industrial metals, raw materials, and international stocks - will become the 'best rotation width investments'. Currently, investors' allocation to commodities is at its lowest level since June 2017
Similar to Chinese stocks, commodities have also danced to the positive news in China this week.
Data shows that, driven by favorable conditions in China, LME copper once again reached the $10000/ton mark on Thursday, marking the first time since June this year.
(London copper futures daily chart, source: TradingView)