After the Chinese government introduced a series of favorable policies, the Chinese stock market has been fully unleashed. The Shanghai and Shenzhen 300 Index rose 15.7% last week, marking its strongest weekly performance since November 2008. The Hang Seng China Enterprises Index in Hong Kong has risen for 11 consecutive trading days, setting a record for the longest increase since 2018.
With the arrival of the National Day holiday this week, although A-shares have closed, Hong Kong stocks are still "boiling". As of Tuesday's close, the Hang Seng Index in Hong Kong closed up 6.2%, while the Hang Seng Technology Index rose 8.53%. Chinese securities firms and domestic real estate stocks have all exploded: Rongxin China rose over 397%, Agile Group rose over 160%, and Shimao Group rose over 153%; China Merchants Securities rose over 81%, CITIC Securities rose over 39%, and Shenwan Hongyuan rose over 33%.
The surge in Chinese stocks has not only been sought after by a group of Wall Street tycoons, but even a rare phenomenon has emerged in the Japanese stock market: the rush to raise Chinese assets. It is reported that the A-share Southern CSI 500 Index, listed on the Japanese stock exchange, closed up 77.8% today at 6399 points.
In addition, the double long products of the Southern Dongying CSI 300 Index listed on the Hong Kong Stock Exchange rose by over 35%, and the double long products of the Southern Dongying Hang Seng Index rose by over 12.3%.
Meanwhile, the Japanese stock market experienced a significant decline. The Nikkei 225 index closed down 2.18% on Wednesday at 37808.76 points. The Japan Eastern Stock Exchange index closed down 1.4% to 2651.96 points. Some analysts suggest that investors in the Japanese and Korean markets may become nervous due to the performance of A-shares, and choose to reduce their holdings of stocks to compete for Chinese assets.
On the other hand, hedge funds that claim to be "smart money" are also flooding into China.
The latest report released by Goldman Sachs shows that, driven by the Chinese government's far beyond expected stimulus measures, global hedge funds have flooded into the Chinese stock market, leading to the strongest weekly buying on record last week (September 23-27).
Goldman Sachs reported that hedge funds have "sharply" accelerated their allocation of Chinese assets, with purchases of Chinese stocks reaching their highest level since the bank began recording in 2016 during the week of September 23-27.
According to the above report, the inflow of funds mainly consists of long positions, especially in individual stocks, with buying mainly concentrated in the consumer, industrial, financial, and information technology sectors. Energy is the only sector that has been slightly sold off by hedge funds.
In addition, the significant rebound in the Chinese stock market helped stock selection hedge funds focused on the Chinese market achieve a 6% return last week, setting a record for Goldman Sachs' best weekly performance on record. So far this year, the estimated return rate of these hedge funds has reached 12.8%.
It is worth noting that not only hedge funds and speculators, but also many foreign long-term investors are now worried about missing out on opportunities. According to LSEG data, foreign stock exchange traded funds (ETFs) focused on Chinese stocks received $2.4 billion in inflows during the last three trading days of September, in stark contrast to $2.7 billion in outflows between the beginning of the year and September 25th.
Investors and analysts have expressed that despite the bleak economic outlook and geopolitical tensions, reducing holdings in Chinese stocks has been the biggest consensus trade in recent years, but the direction is now shifting.
Wee Khoon Chong, Senior Market Strategist for Asia Pacific at Bank of New York Mellon, said that we have seen a significant increase in interest in buying Chinese stocks as we enter the Chinese National Day holiday. This is encouraging, indicating that global investors' sentiment towards China may shift after long-term capital outflows.