Chinese stocks, once a staple of global funds but later deemed uninvestable by other investors, are once again attracting investor attention after years of being ignored. Although caution remains, optimism is growing after last month’s rise of US$4.5 trillion.
This is the assessment of Kinger Lau, Goldman Sachs’ Hong Kong managing director and chief China equity strategist. He has been “travelling around the world” answering questions over the past four weeks since China announced its surprise economic stimulus package on September 24.
“I get a lot of emails, and 60 to 70 percent[of them]start with the phrase, ‘It’s been a while, we haven’t talked, we haven’t seen each other,'” he said in an interview. “For some investors who haven’t been paying much attention to China in the last year or two, there’s certainly a lot more interest.”
Global capital inflows have pushed benchmark stock indexes in mainland China, Hong Kong and New York up 12% to 23% over the past month, according to Bloomberg data. As a result, the market value has recovered to approximately $4.5 trillion. Mr Lau said this could further accelerate capital inflows.
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Boom or bust: How long will the Chinese stock frenzy last?
Boom or bust: How long will the Chinese stock frenzy last?
To drive home his point, Lau said that on a recent marketing trip to the US, he and his team had “35 meetings in five days” with various investors.
“What actually happened is that the ‘policy put option’ was activated,” Lau said, referring to the belief that the Chinese government would do everything possible to save the market. “I’m not saying everyone is going to buy. But the level of interest has increased tremendously and is very much in line with the flow and positioning.”
