© Reuters. FILE PHOTO: An electronic board shows Shanghai and Shenzhen stock indexes, at the Lujiazui financial district in Shanghai, China October 25, 2022. REUTERS/Aly Song/File Photo
By Summer Zhen and Rae Wee
HONG KONG/SINGAPORE (Reuters) – Investor negativity on China is showing signs of shifting as money managers stop or slow cuts to their exposure, even if they see a durable bullish tilt in the market or sentiment as distant.
After August, when foreigners dumped a record 90 billion yuan ($12.34 billion) in Chinese stocks, net selling has slowed to a more sedate 20 billion yuan in the month to date.
Economic data has also turned in positive surprises for the first time in months.
Investors at six large asset managers – Pictet, BNP Paribas (OTC:) Asset Management, Janus Henderson, J.P. Morgan Asset Management, Invesco and RBC – told Reuters they have neither reduced nor added to their China weighting following recent measures to support the economy.
“While the overall picture is grim, bearishness around Chinese equities may have reached a local peak and we therefore are refraining from cutting our exposure,” said Dong Chen, head of Asia macroeconomic research at Pictet Wealth Management.
China’s blue-chip CSI 300 Index is down 4.5% this year and hit a 10-month low this week, but has steadied on support levels at around 3,700.
The is flat in September after a 5.2% slide in August, while the is also holding off fresh 2023 lows. It is down 9.5% this year. World stocks are up 12%.
On the economic front, industrial output and retail sales growth also beat forecasts in August.
“Market sentiment towards Chinese equities has slightly recovered following the July Politburo meeting,” said Chi Lo, senior market strategist for Asia-Pacific at BNP Paribas Asset Management, as authorities pledged support for consumption and property.
“The supportive policy tone has been seen as mildly positive. Officials recognise the problems in the economy and are ready to step up support further, but still not at the cost of worsening China’s structural imbalances.”
WAIT AND SEE
The encouraging signs haven’t moved managers into buying, or drawn global capital, but they are being noticed and many are taking a patient wait-and-see approach rather than deciding to pull more funds out.
“The problem at the moment is that portfolio managers’ perceptions are in this painful transition phase — they have suffered too many full storms on a recovery in Chinese equities,…