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BofA Sees Increased Concerns, Frustrations Among China Investors

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Bloomberg Nov 28 16:49 · 23.6k Views

Winnie Wu, China equity strategist at BofA Securities, discusses the state of the market, the economy, the government's policies and investors' sentiment. She speaks on "Bloomberg: The China Show."

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Transcript

  • 00:00 Let's just talk about the China markets as it stands right now.
  • 00:04 There's obviously the geopolitical overhang since the last time we've talked,
  • 00:08 but also there's so much expectations.
  • 00:11 There's,
  • 00:12 you know, news and rumors of a screenshot saying that the Central Economic Work Conference in Beijing is going to have an earlier than expected meeting.
  • 00:20 There's going to be stimulus, stimulus, stimulus on the agenda.
  • 00:22 What's grabbing your attention right now?
  • 00:27 So
  • 00:28 thank you for having me.
  • 00:29 Happy Thanksgiving.
  • 00:30 I'm actually marketing in Singapore this week.
  • 00:33 And I think one, a couple of interesting feedback here, right?
  • 00:36 You know, in Singapore we have sovereign funds.
  • 00:38 We have many long term
  • 00:40 long only regional funds.
  • 00:41 But this time round seems even the long term investors focus are more on the short term.
  • 00:46 So many people focus on next three to six months or even next three to six weeks.
  • 00:51 What's going to happen and what are the China policy responses?
  • 00:55 And clearly, you know, yesterday
  • 00:58 chatter, speculation about the increase, the fiscal stimulus is
  • 01:02 making investor excited again.
  • 01:04 However, I think generally there are some increasing concerns or frustrations regarding the China policy response.
  • 01:12 And I think some investors say
  • 01:15 we've been buying into the news, buying into the speculation and sell on the fact.
  • 01:20 And that seems to be the pattern.
  • 01:22 And I think there's some feedback about
  • 01:24 the policy stimulus so far, very much still focus on, you know, the local governments or potentially the banks, but not enough has been done in terms of helping out the real economy, the private sector companies and on the consumer side.
  • 01:41 Whitney, David here.
  • 01:42 So
  • 01:43 my guess is based on your tone, nothing, nothing much has changed, although
  • 01:48 that may be the opportunities to your point in our short term and
  • 01:51 you know, tactical trades,
  • 01:53 what are some of the best opportunities right now given the recent pullback, particularly in Hong Kong?
  • 02:00 Yeah,
  • 02:01 I would say from a three to six months perspective,
  • 02:05 things might need to go worse before it goes better,
  • 02:09 right.
  • 02:09 Because I still think, you know, for China is probably a responsive strategy in terms of they need to see what is the new Trump administration going to do, what's the policy focus?
  • 02:20 Is that focusing on tariffs?
  • 02:22 Is that focusing on, on technology decoupling or is that focusing on financial market, financial sanctions or on the currency side?
  • 02:30 So you know, I think for China they probably need to wait to to, you know, they see the for the external policy shocks to determine the right respond, how much we are the focus
  • 02:41 and how to execute.
  • 02:43 So unfortunately in the next three to six months, if we look at fundamental side, you know we don't get earnings until probably March next year.
  • 02:50 And I doubt the focus earning will be better
  • 02:53 or beating expectations.
  • 02:56 And on the external side, we'll probably see the geopolitical tensions first and the China response later, maybe in two sessions in March or potentially even later at July.
  • 03:06 So for the short term, we're still focusing on downside protection other than the very short term trading on the new selling on the facts,
  • 03:14 we think that Asia might be more resilient defensive, whereas H share Adrs could be more vulnerable to flow position selling, especially if we hear more
  • 03:25 bad news regarding to sanctioning on you know Hong Kong market or capital market targeted
  • 03:33 geopolitical tensions.