The number of fund managers with an overweight position in Chinese equities has fallen to 5% as faith in the country’s post-pandemic recovery begins to run out of steam.
That figure was down from 27% in April and 39% in March, according to an influential survey from Bank of America.
A surge in mainland Chinese and Hong Kong-listed stocks that added about $4trn in market value since November started to fade in February, largely on the back of a deterioration in the global economy.
As recently as April though, most asset managers were still predicting that the recovery rally had further to go, pointing to improving macro data.
However, China’s economy began to stumble in May as industrial output and retail sales data missed expectations.
Attention has now turned to whether the government will unleash a stimulus programme to shore up an economy that was expected to be the engine of global growth as the West teeters on the brink of recession.
Last week, the People’s Bank of China (PBOC) cut the interest rate on its one-year medium-term lending facility (MLF), its first such easing in 10 months. The MLF is widely seen as a precursor to the more important benchmark loan prime rate (LPR). The PBOC is due to announce any changes to the LPR tomorrow.
The Bank of America survey canvasses the opinions of 166 investors who manage approximately $329bn in assets.