Pages
Friday, July 10, 2020
Cash flows into China funds fuel fears of 2015 boom-bust repeat
By Reuters
Investors poured the most cash into China funds since July 2015, Bank of
America said on Friday, even as fears grew of a repeat of the 2015-16
bubble that saw the benchmark Shanghai index fall more than 40 per cent
from its peak in just a few weeks.
This week’s USD6.1 billion directed into China funds was the second largest ever, BofA added, citing data from EPFR global.
Chinese funds also led equity inflows, receiving inflows equal to 2.5
per cent of assets under management, compared to just 0.1 per cent
globally, the bank said.
Shares in the blue-chip CSI300 index have risen to levels not seen since
the 2015 bubble, supported by hopes of an economic recovery, a
conducive regulatory environment and retail investor enthusiasm.
Chinese state-run media, previously encouraging the rally, warned on
Thursday that investors should respect the market, manage risks and
pursue rational investments, after regulators published a list of
illegal margin lending platforms in an apparent move to calm markets.
That paused the stock rally on Friday, the session ending lower for the
first time since June 29, after the country’s state funds announced
stake cuts in companies.
“It’s not the first time we’ve seen moves of this magnitude and it
doesn’t typically end well,” said Craig Erlam, senior market analyst at
OANDA.
“If we continue to see these efforts to encourage participation, I would
be surprised if we don’t continue to see inflows. People don’t like to
miss out on rallies like these, which is one of the things that makes
them so dangerous.”
BofA’s report also showed weekly flows of USD29.4 billion into cash
funds, $17.8 billion into bonds funds, USD6.2 billion into equities
funds and USD2.4 billion into gold funds. Emerging markets bonds saw
their first inflow in four weeks.
The bank sees “cross asset sentiment moving quickly away from ‘extreme
bearish’”, citing its Bull & Bear indicator, that tracks
positioning.
Subscribe to:
Post Comments
(
Atom
)
No comments :
Post a Comment