Bridgewater believes that Chinese stocks still offer attractive valuations after the rebound.
Bridgewater's onshore hedge fund in China is increasing its investment in the Chinese stock market, stating that valuations remain attractive. The Chinese stock market's surge last month brought the fund's annual return to 31%.
Headquartered in Shanghai, Bridgewater stated in its third-quarter letter to investors that despite the rebound in the Chinese stock market, prices are still at a relatively low level compared to profit prospects, and Bridgewater will continue to "moderately increase" its holdings of Chinese stocks. According to Bloomberg News, as of September 30, the fund also held long positions in bonds and maintained a "neutral" stance on commodities.
As China has introduced a series of large-scale stimulus plans to boost the economy and support the real estate and stock markets, the CSI 300 Index soared by 21% last month.
Bridgewater stated that this sent a policy signal that "significantly" boosted investors' risk appetite. At the same time, the company said that the Federal Reserve's rate cuts improved global liquidity, increasing the attractiveness of risk assets.
Bridgewater said, "We expect the policy environment to remain loose, and such an environment is generally more favorable for risk assets overall."
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Earlier this year, Bridgewater's asset management scale in China increased to more than 40 billion yuan (about $5.6 billion). Its All Weather strategy achieved a return of 19% in September, and a return of 31% in the first nine months of the year.
Anticipating that Chinese policymakers will continue to support the economy, the company is "moderately" long on short-term bonds. It also plans to increase long-term bond exposure. The letter stated that although the market has already digested expectations of policy tightening in the bond market in the coming years, Bridgewater still sees investment opportunities.
The U.S.-based fund management company Principal Asset Management stated that China is taking "meaningful" measures to revitalize its economy, which has improved investor sentiment.
The company's Global Equity Portfolio Manager, Steve Larson, said at a conference in Hong Kong on Thursday: "We have been increasing our investment in China, both indirectly through the Hong Kong market and directly through the Chinese market," "Regarding the future direction of development, I have shifted from skepticism to being much more optimistic."This optimistic sentiment is not an isolated case. A survey conducted by Bank of America this month shows that as the market's expectations for China to adopt policy easing measures continue to rise, fund managers in the Asia-Pacific region have also become more bullish. They have allocated more funds to Chinese assets and reduced their exposure in India.