After the sharp rise in the Chinese stock market, how will global investors react? Deutsche Bank: By 2025, no institution dares to miss out!
Deutsche Bank analyst Peter Milliken pointed out that the recent sharp rise in the Chinese stock market indicates a change in market trend, and it is expected that this uptrend will continue. Although the market may be overbought in the short term, investors should continue to increase their holdings in A-shares and Hong Kong stocks. Deutsche Bank predicts that by 2025, global investors will pay more attention to Chinese stocks, especially when the performance of US stocks is poor. The analysis believes that companies in the current Chinese market have strong financial strength to carry out large-scale buybacks or investments
Massive trading volume, repeatedly breaking records, how to view the explosive surge in the Chinese stock market?
On October 2nd, Deutsche Bank analyst Peter Milliken released a strategic report stating that such a rebound of this scale indicates a sharp change in market trends. The analyst stated:
"This uptrend will continue. Based on our experience, the short covering of the broad market index is usually not a matter of a few days, but a trend change."
In the entire month of September, the CSI 300 Index rose by 23.06%. As for the Hong Kong stock market, the Hang Seng Index accumulated a 17.48% increase, dominating the majority of this year's gains.
Deutsche Bank stated that, despite the possibility of the market being overbought in the short term, investors should continue to increase their holdings. One reason is that investors' positions in A-shares or Hong Kong stocks are usually only half of what they were before the epidemic, and this situation requires a large amount of trading and market action to reverse.
At the same time, it is worth noting that the United States accounts for 63% of the iShares Global Stock Index, with Japan ranking second at only 5%. Deutsche Bank stated that if the share of U.S. stocks falls to 50%, the stock allocation in other regions of the world will increase by one-third. The analysis believes:
"With a high allocation to U.S. stocks, investors often adhere to a certain style. If the U.S. performs poorly, investors focused on momentum and technology are likely to shift their focus to other leading tech companies, during which process, China will receive more attention."
The constituents of the Hong Kong and A-share indices are often world-leading companies with dominant scale globally. Half of these companies have net cash, providing funds for large-scale buybacks or investments in organic or inorganic growth plans.
Deutsche Bank also predicts that as 2025 approaches, no institution dares to miss out on increasing their holdings in Chinese stocks, and they will generate more buying behavior at the beginning of 2025.
In addition, with a series of heavyweight favorable policies introduced in China, Deutsche Bank economist Xiong Yi stated that liquidity support will also come from the People's Bank of China's swap arrangements of over 500 billion yuan, providing funds for non-bank financial institutions to purchase stocks.
Deutsche Bank also pointed out, "As consumption gradually heats up and profit margins rise, we expect this to drive more stock allocations in the future. Therefore, we recommend investors to continue looking for market entry opportunities."