China’s $2.7 trillion stock rally lures global fund holdouts despite risks

NEW YORK – Global fund managers who had been holding back on China are wading back in.

The MSCI China Index has climbed 24 per cent from a January low, when worries over the Chinese economy, an entrenched property crisis, seemingly futile stimulus efforts and simmering tensions between Beijing and Washington had prompted many investors to pull back, or entirely cut, their China exposure. That is changing as an improving economic outlook and fresh government measures to shore up the housing market convince more and more global investors that the worst is over.

Even after the rally sputtered somewhat in recent weeks – with property shares retreating sharply from their highs – Chinese and Hong Kong stocks as a whole are still up by some US$2 trillion (S$2.69 trillion) in market value since the January low, making China an outperformer among emerging markets. Newly confident investors see room for further gains, with Goldman Sachs Group saying the recent pullback “provides a better entry point” for investors, rather than a path towards a new low. 

Source: TRADE FINANCE