After making a big profit, Qiaoshui said it will still increase its holdings in Chinese stocks!

Jinshi Data · 10/18 13:19

China's onshore hedge fund, a subsidiary of Qiaoshui Fund, is increasing its investment in the Chinese stock market and says its valuation is still attractive. The sharp rise in the Chinese stock market last month brought the fund's annual return to 31%.

Shanghai-based Qiaoshui said in a third-quarter letter to investors that despite a rebound in the Chinese stock market, prices are still low compared to profit prospects, and Qiaoshui will continue to “moderately increase” its holdings in Chinese stocks. As of September 30, the fund also held long bonds and had a “neutral” stance on commodities, according to Bloomberg News (Bloomberg News).

The Shanghai and Shenzhen 300 Index surged 21% last month as China launched a series of large-scale stimulus programs to boost the economy and support the real estate and stock markets.

Qiaoshui said this sent a policy signal and “significantly” boosted investors' risk appetite. Meanwhile, the company said that the Federal Reserve's interest rate cuts have improved global liquidity and increased the appeal of risky assets.

Qiaosui said, “We expect the policy environment to remain relaxed. Overall, this environment is relatively favorable to risky assets.”

Earlier this year, the Qiaoshui Fund increased its asset management scale in China to more than 40 billion yuan (about 5.6 billion US dollars). Its all-weather strategy yielded 19% returns in September and 31% in the first nine months of this year.

As Chinese policymakers are expected to continue to support the economy, the company “moderately” lengthened short-term bonds. It also intends to increase its exposure to long-term bonds. The letter said that although the market has absorbed expectations of tightening bond market policies in the next few years, the Qiaoshui Fund still sees investment opportunities.

Principal Asset Management (Principal Asset Management), a fund management company headquartered in the US, said China is taking “meaningful” measures to revitalize its economy, which is boosting investors' sentiment.

Steve Larson (Steve Larson), the company's global equity portfolio manager, said at a conference in Hong Kong on Thursday: “We have been increasing our investment in China, both indirectly and directly through the Chinese market,” and “I have gone from being skeptical to much more optimistic about the future direction of development.”

This optimism is not just an example. A Bank of America survey this month showed that as the market's expectations for China to adopt policy easing measures are getting higher, fund managers in the Asia-Pacific region have also become more bullish. They invested more money in Chinese assets and cut their allocation in India.