Foreign-listed Chinese stocks rally as Beijing soothes nerves (updated)
16/03/2022 11:26
(Recasts, adds details)
By Danilo Masoni and Tiyashi Datta
March 16 (Reuters) - Foreign-listed Chinese stocks rallied
on Wednesday after Beijing vowed to keep markets stable,
soothing overseas investors' nerves after a selloff due to
worries over differences between China and the West in the
Russia-Ukraine war.
Remarks by China's Vice Premier Liu He who said Beijing
would roll out support for the economy and keep markets stable
sparked a bounce from 21-month lows for local equities, also
fuelling a rally for U.S.- and Europe-listed Chinese shares.
JD.com JD.O , Alibaba BABA.N and Pinduoduo PDD.O saw
their shares jump between 20% and 31% in U.S premarket trading,
after they all fell to multi-year lows during Tuesday's selloff.
urn:newsml:reuters.com:*:nL5N2VI3IH
Gaming company NetEase NTES.O , online video platform IQIYI
IQ.O , music-streaming co Tencent Music TME.N , and mobile
game publisher Bilibili BILI.O saw similar outsized moves,
while Amsterdam-listed Prosus PRX.AS , which owns a 29% stake
in the Chinese tech giant Tencent 0700.HK , gained 20%.
Citibank's Asia-Pacific trading strategist in Hong Kong,
Mohammed Apabhai, likened the moment to the Federal Reserve's
market backstop in 2020 or then-ECB chief Mario Draghi's
'whatever it takes' speech that staunched the eurozone crisis in
2012.
"It's not quite of that order of magnitude, but it's not
that far away either," he said.
"Easing that the market was expecting wasn't actually coming
through. But now it seems like China has realised that the need
to do something to support the economy, something proper."
The gains also reflect investors looking to pick up bargains
after Chinese equities have seen severe selling pressure in
recent days. Hong Kong stocks .HSI fell to a six-year low on
Tuesday.
"Although it is still a volatile and somewhat opaque market,
I think this is the right moment to look at Chinese stocks
because valuations are good and macro data are recovering," said
Giuseppe Sersale, fund manager at Anthilia in Milan.
Frankfurt-listed depository receipts for Alibaba AHLAy.F
were among the most traded stocks on the Tradegate T2GG.F and
Lang & Schwarz LUSGn.DE platforms, suggesting interest from
German retail investors.
According to Vanda Research, which tracks retail flows,
appetite for China ADRs has picked up the most since September
2021 with net purchases over the last 10 trading sessions
topping $500 billion, the highest level in over 6 months.
Separately, China's securities regulator said it would
continue to communicate with U.S. regulators and strive to reach
an agreement on China-U.S. audit supervision cooperation as soon
as possible. urn:newsml:reuters.com:*:nB9N2V7012
The speed at which Beijing has responded to this week's
selloff would suggest it does not want to let things drift out
of control, said AJ Bell investment director Russ Mould in
London.
"Its key goal is common prosperity and stock markets matter
because a lot of Chinese retail investors have money in
equities, so their wealth is at stake if shares are plummeting
in value," he said.
Analysts see Chinese stocks as a possible good long-term
investment, following a torrid 2021 amid a crisis in the real
estate sector and a severe regulatory crackdown on tech giants.
urn:newsml:reuters.com:*:nL8N2UC3NK
The MSCI China index .dMICN00000PUS currently trades at a
valuation discount of around 36% to world stocks, twice as much
the 20-year average discount, per Refinitiv data.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
China stocks discount https://tmsnrt.rs/3u4Xtsk
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Danilo Masoni in Milan and Tiyashi Datta in
Bengaluru; Editing by Saikat Chatterjee and Louise Heavens)
((Danilo.Masoni@TR.com; +39-02-66129734; Reuters Messaging:
danilo.masoni.thomsonreuters.com@reuters.net; On Twitter https://twitter.com/damasoni))