Chinese stocks remain unloved among global funds amid concerns about banking crisis, property market risks: BofA surveys

Concerns about banking crisis and property market slump keep investors at bay even as valuations dive: Bank of America survey

The pool of bulls on China has shrunk even to level below October 2022 before Beijing abandoned its zero-Covid policy

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Market indices displayed on a screen inside a building in Central, Hong Kong in February 2023: Photo: Li Jiaxing

Published: 7:00am, 21 Dec 2023Updated: 11:14am, 21 Dec 2023

Asian fund managers remained unconvinced about getting back into Chinese equities, even as they count among the cheapest globally. Concerns about a banking crisis as well as property market woes are keeping derating pressures elevated.

The number of investors with underweight calls exceeded their opposite camp by 9 percentage points in December, unchanged from November, according to the latest Bank of America (BofA) survey of global and regional investors. That made them the most bearish on China relative to 11 other Asian markets.

Investors would rather stick to a wait-and-watch approach or look for opportunities elsewhere than be exposed to China equities, the survey showed, with 62 per cent of them taking that stance.

“Investor interest towards risk assets in China is shockingly low,” BofA strategists including Ritesh Samadhiya said in a December 19 report. Investors preferred to stay out rather than be exposed, “given their belief that Chinese households will stay put in a preservation mode”, they added.

The apathy extends beyond the near-term, with 74 per cent of the respondents expecting a structural derating of Chinese stocks over the long haul, BofA said. Only 19 per cent of money managers predicted stronger growth in China over the next 12 months, falling below the level seen during the market slump in October last year.