According to reports, a quantitative fund under Pacific Investment Management Corporation (PIMCO) is targeting Chinese technology stocks and claims that their stock valuations are attractive.
"As valuations become cheaper, we are getting closer to incorporating these positions into our investment portfolio," said Chris Brightman, Chief Investment Officer of Research Affiliates LLC, a quantitative fund under PIMCO, in a recent interview
"The valuations of Internet companies such as Alibaba and Tencent have fallen to historic lows, and their share prices have become extremely attractive," he further explained.
According to the data, according to the 2023 earnings forecast, the valuation of Zhonggai Internet shares was 15.7 times PE (P/E ratio) in September 2023, 14.2 times PE in December 23, and had dropped to around 13 times in March 2024, which was at a low level.
Brightman's viewpoint echoes that of his peers. Some funds have started to increase their holdings in Chinese stocks, as the recent strong economic recovery in China may lead to a significant rebound in Chinese concept stocks once suitable catalysts emerge.
According to data compiled by the media, in the past year, PIMCO RAE emerging market funds, which hold a large amount of Chinese stocks, have outperformed 94% of their peers in terms of performance.
Brightman stated that the reason why the fund can achieve significant returns is due to its quantitative model based on factors such as book value, sales to earnings ratio, cash flow, and dividends. The fund currently holds Chinese stocks such as China Construction Bank, Bank of China, and China Petroleum.
"From a value perspective, China now looks very attractive. This contrasts with very expensive stocks, such as those in India," he said.
He also emphasized that the Chinese stock market "provides considerable compensation for major geopolitical risks.".