The A-share index breaks through 3200 points! Founder of the "Dollar Smile Theory": Chinese stock market will continue to see a "sharp rebound"
On Monday, the SSE Index broke through 3200 points, with an increase of 3.73%. Stephen Jen from Eurizon SLJ Capital stated that investors should continue to pay attention to the market rebound brought by China's stimulus plan. He pointed out that the Chinese stock market is severely undervalued and may experience a significant rebound in the future. Despite 19% of global fund managers choosing to short Chinese stocks, Jen believes that with the Fed rate cuts and policy easing, risk assets will perform well, and he expects global stock markets to rise strongly by the end of the year
Zhitong Finance APP noted that Stephen Jen of Eurizon SLJ Capital stated that investors should continue to follow the recent stimulus-driven momentum in the Chinese stock market and the appreciation of the Renminbi, as well as the decline in Chinese bonds. The Shanghai Stock Exchange Index briefly surpassed 3200 points after the opening on Monday, rising by 4.02% to 3211.61 at the time of writing.
In a report to clients last Friday, Jen mentioned, "Investors' holdings in all Chinese stocks are very low, and the Chinese stock market is severely undervalued, so a significant rebound is entirely possible."
Last month, Jen stated that with the US interest rate cuts, Chinese companies may be forced to sell USD 1 trillion worth of dollar-denominated assets. Prior to this, billionaire investors like David Tepper have also expressed optimism towards China after the Chinese government introduced comprehensive stimulus measures.
Policy easing measures drove the CSI 300 Index to its largest weekly gain since 2008 last week. However, in a survey of global fund managers by Bank of America in September, 19% of respondents indicated that "shorting Chinese stocks" was one of the most popular trades.
Jen mentioned that with China intensifying its efforts while the US Federal Reserve cuts interest rates and oil prices remain low, risk assets "should perform well."
He added, "After the US election, I expect global stock markets to have a strong year-end rally."
Jen is the founder of the "dollar smile" theory, which suggests that the US dollar appreciates when the US economy is booming or in deep recession. He predicts that as the US inflation rate slows to zero and the world's largest economy experiences a "soft landing," the exchange rates of the US dollar against the Euro, Yen, and Renminbi will decline