Bank of America European institutional roadshow: strong interest and optimism toward the Chinese market, generally bullish on "rising until the end of the year"

Bank of America European institutional roadshow: strong interest and optimism toward the Chinese market, generally bullish on "rising until the end of the year"

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Since the beginning of this year, judging from the performance of stock markets in the U.S. and major Asian markets, the Chinese stock market has been one of the best-performing markets. Recently, Bank of America stated during its European institutional roadshow that many investors are optimistic that the rebound in the Chinese stock market will continue until the end of the year.

According to Wind Trading Desk, Merrill Lynch stated in a report on September 29 that its latest survey shows that European investors’ confidence in the Chinese stock market has significantly rebounded. Nearly 70% of investors at the Paris group meeting and nearly 100% at the London group meeting expect the rebound in the Chinese stock market to last until the end of the year.

Europe’s newly participating investors with a “fresh perspective” are more optimistic about the relatively low valuation of the Chinese stock market, the continually released innovative vitality, and the risk buffer brought by “policy put options.” They have proposed a novel bullish logic, similar to the period of the A-share rebound in 2015, under the current economic environment, the Chinese stock market may usher in new opportunities.

Although some emerging market funds have shifted from underweight to neutral or overweight in Chinese stocks, external capital inflow so far appears limited. Global funds still maintain underweight or only hold small positions in China, and some funds have missed out on China this year due to focusing on Europe. Since the beginning of this year, the Chinese stock market has been one of the best-performing markets, and global funds are more willing to increase allocations to China at both the market level and in specific themes/sectors (such as global financial/technology funds).

Bank of America suggests investors focus on the continuous inflow of Chinese household deposits into the stock market, driving market repricing, and the positive wealth effect of the stock market reversing consumption and CPI, thereby boosting consumer stocks.

Regarding investment strategies for the Chinese stock market, Bank of America recommends in the report to increase holdings, but do not chase the rally. Analysts reiterated the barbell strategy, using large-cap tech stocks and high-dividend state-owned enterprises as defensive investments, while configuring growth stocks at the other end. It is recommended to accumulate high-quality beta stocks (such as leaders in AI/autonomous driving/robotics) and composite profit growth stocks (such as new consumption and innovative drugs) at low levels, rather than chasing hot themes at high levels.

Risk Warning and DisclaimerThe market carries risks, and investments should be made with caution. This article does not constitute personal investment advice and does not take into account the individual investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investment is at your own risk. ```