2024-07-10 05:30:00 ET
Summary
- The KraneShares CSI China Internet ETF continues to outperform the S&P 500 since the end of January despite the recent pullback.
- China’s government has not deployed the preverbal 'policy bazooka' having witnessed the increase in debt and inflationary consequence of loose Western countries’ monetary policies post-COVID.
- While we believe the fundamental support for the rally in China’s stock market overall remains intact, Hong Kong-listed, internet stocks might be particularly attractive and poised for further gains.
When I visited Hong Kong in December of 2023, the city was full of energy with the usual traffic and frantic shoppers preparing for the Christmas and New Year's holidays. However, investors and trading desks were feeling the full brunt of China's three-year bear market. The effect of the market's daily grind lower was palatable. Trading volumes contracted, initial public offerings (IPOs) were shelved, and mergers and acquisitions were put on hold. Sparks of optimism were abruptly snuffed out as the rally following the removal of China's zero COVID policy proved unsustainable. Although December's extreme pessimism felt like a contrarian indicator, the market had one last plunge in store, which occurred in January 2024....
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For further details see:
Revisiting Hong Kong: Optimism Still Improving Even As Rally Gets Tested