China bulls look to run on bargain shares strategy
Another year of losses is more reason to buy for some investors, who see a match on valuations with shifts in global capital out of boom markets
Few investments have disappointed as consistently in recent years as China equities.
The Hang Seng Index went up a mere 2.9 per cent in 2013 while the A-share-tracking CSI 300 lost 7.6 per cent in the year just gone.
The sorry performance contrasts sharply with that of soaring Japanese and United States equities - the Nikkei-225 Index finished the year up nearly 57 per cent and the S&P 500 29 per cent.
Investors by now are familiar with the litany of issues that dog China equities. First is slowing growth. When Finance Minister Lou Jiwei said on July 12 he would be comfortable with an economic growth rate of as low as 6.5 per cent, the CSI 300 index dropped 2.2 per cent. The idea of slowing mainland economic growth has kept down mainland equities since.
I’m super bullish [on China]. I’m investing and advising clients to invest
The mainland's frequently spiking interbank rates have also had a role. The three-month lending rate used among banks doubled in June-July and again jumped in November and December. Each round of rate spike alarmed investors about the health of the mainland banking system, particularly with analysts continuously revising upwards their estimates of non-performing loans.