Almost as quickly as the China stock rally happened, several investment analysts have been swift to point out its weaknesses. “China’s recent rally was not justified by fundamentals,” Citi’s emerging markets strategists said in a note Friday that downgraded China, while upgrading India. The firm is overweight Chinese internet, industrials and technology, but neutral on autos and consumer stocks broadly. Among the sectors, consumer discretionary stocks have the highest expected earnings per share growth this year of about 29%, the Citi report said. After a tepid start to 2024, the MSCI China Index is beating not only emerging markets but the S & P 500 with gains of nearly 11% year-to-date. “Although it looks like a big rally, it’s not broad,” said Ding Wenjie, investment strategist for global capital investment at China Asset Management Co., according to a CNBC translation of her Mandarin-language remarks. “The increase in capital is not as big as we expected,” she said, noting hedge funds rather than long-only funds were doing much of the buying — primarily in Hong Kong-listed consumer discretionary names in the internet tech sector. MSCI China’s top holdings are Hong Kong-listed shares of Tencent and Alibaba , which have both recently ramped up stock buybacks with their extra cash. “Our strategy has always placed great importance on free cash flow,” Ding said, noting …
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[mwai_chat context=”Let’s have a discussion about this article:nnAlmost as quickly as the China stock rally happened, several investment analysts have been swift to point out its weaknesses. “China’s recent rally was not justified by fundamentals,” Citi’s emerging markets strategists said in a note Friday that downgraded China, while upgrading India. The firm is overweight Chinese internet, industrials and technology, but neutral on autos and consumer stocks broadly. Among the sectors, consumer discretionary stocks have the highest expected earnings per share growth this year of about 29%, the Citi report said. After a tepid start to 2024, the MSCI China Index is beating not only emerging markets but the S & P 500 with gains of nearly 11% year-to-date. “Although it looks like a big rally, it’s not broad,” said Ding Wenjie, investment strategist for global capital investment at China Asset Management Co., according to a CNBC translation of her Mandarin-language remarks. “The increase in capital is not as big as we expected,” she said, noting hedge funds rather than long-only funds were doing much of the buying — primarily in Hong Kong-listed consumer discretionary names in the internet tech sector. MSCI China’s top holdings are Hong Kong-listed shares of Tencent and Alibaba , which have both recently ramped up stock buybacks with their extra cash. “Our strategy has always placed great importance on free cash flow,” Ding said, noting …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
