World’s Largest Public Hedge Fund Sees Chinese Stock Rebound

Man Group, the world’s largest publicly traded hedge fund, is seeing Chinese stocks rebound further.

CHINA-50-–-Daily-ChartCHINA 50 – Daily Chart

The index of the largest Chinese stocks continues to decline from the high in May. There is the potential to test the support at 11,840 if the weakness continues.

Man Group said the July meeting of China’s government will see additional measures aimed at boosting consumption to revive the country’s stock market.

“The market could do extremely well in that environment,” said Andrew Swan, head of Asian equities at the hedge fund. Swan has an overweight exposure to China, anticipating additional stimulus measures to boost the economy.

A further shift in policy at the country’s closely-watched economic meeting will likely add a new catalyst to the stock market. Chinese stocks are looking for a boost after erasing the year-to-date gains as economic woes continued and property market jitters remained.

This a “very important meeting, because my sense is that China needs to evolve from where it is today,” Swan said. “Deflationary forces are already in the economy. We expect policymakers will want to address that.” US investment bank JPMorgan Chase and asset manager Invesco share the company’s optimistic tone. Both companies see stocks boosted as leaders map out long-term economic plans and policy shifts.

The $135 million MAN GLG Asia ex-Japan Equity fund, managed by Swan, has outperformed almost 90% of its peers over the last three years. The fund’s managers expect to reverse their negative outlook on Indonesia and the Philippines this year as the move to lower interest rates at the Federal Reserve allows those countries to also cut rates.

Analysts at the group expect technology stocks to outperform due to artificial intelligence-linked demand.

China’s policymakers already took further action for the property sector on Wednesday, with news that the minimum down payment ratio for first-time homebuyers would be lowered to 20% from 30%, the down payment ratio for second-time homebuyers would be lowered to 30% from 40%, and the loan rate would be lowered to 3.5.

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