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The world’s major stock markets are in turmoil, with indexes nearing all-time highs and breaking records.
The market has gotten so hot that some analysts are asking investors to reconsider this adage. “If I sell it in May, it will disappear.” this year.
After all, 14 of the world’s 20 largest stock markets recently hit all-time highs. Bloomberg tally Saturday.
The three major US indexes hit record levels. Dow Jones Industrial Average Friday’s closing price exceeded 40,000 for the first time. Stock markets in other countries, including Europe, India and Japan, are also near or at record highs.
Broadly speaking, MSCI ACWI Investable Market Index, The survey, which tracks large and mid-cap companies across developed and emerging markets, hit an all-time high on Friday.
Markets are getting very hot, even the Chinese stock market going into 2024. meltdown mode — is also booming.
of CSI300tracks 300 large-cap and mid-cap stocks in the Shanghai and Shenzhen markets, and is up 7.4% year-to-date.Meanwhile, in Hong Kong Hang Seng Index It’s up 15% so far this year.
Cheap valuations in China are attracting hot money
In general, global equities are driven by fundamental factors such as a generally rosy economy, strong corporate earnings, and potential interest rate cuts, which drive capital out of bonds and into stocks.
But the Chinese market’s rally appears to be driven by attractive valuations, after prices have fallen significantly in recent years.
Despite the risks given the continued weakness in China’s stock market, some investors seem to think it’s worth the gamble. Especially since stocks in other regions are expensive after a long period of rally.
Valuations for Chinese stocks are now roughly in line with pre-pandemic averages, Andrea Scicione, head of investment research firm GlobalData TS Lombard, said in a note on Friday.
In particular, investors are rebalancing their portfolios from India to China to benefit from the rally in hot South Asian markets.indian benchmark Sensex and nifty 50 Both indexes have risen about 20% over the past 12 months.
In a sign of changes in global capital flows, major companies are entering the Chinese stock market one after another. They include “Big Short” investor Michael Burry and billionaire investors. David Tepper’s Appaloosa Management.
Billionaire investor Ray Dalio In March, he said he was still investing in China because of cheap stocks.
There may be further room for the Chinese market to rise
The Chinese government’s strengthening of economic stimulus measures is providing a tailwind. On Friday, the government took the strongest measures to address the real estate market crisis. Bank of America analysts said in a Monday note that the top-down measures are a “clear sign that the Chinese government is placing a high priority on stabilizing China’s still struggling housing market.” ”.
But Global Data TS Lombard’s Scicione warned that the stimulus was introduced precisely because of “economic pain”, as China’s April economic data showed.
“We expect economic activity to enter a period of moderation going forward before new policies aimed at stimulating the economy begin to take effect,” Scicione said. “Chinese stocks will continue to benefit from improved consumer confidence and an export recovery driven by gradual monetary, fiscal and real estate stimulus.”
He said the return of investors to China’s stock market is gaining momentum and is “likely to continue further.”
Early this month, Adam Turnquist, Financial Strategist, LPL He also said the bull market in China’s stock market could continue.