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Goldman Sachs says the Chinese Politburo’s stimulus policies—2 trillion yuan ($284 billion)’s worth of support for propping up its tottering real-estate market, bolstering its banks, fueling its stock market and bailing out local governments—is responsible for a big week and month for China-focused hedge funds.
David Tepper knows this—and thinks it’s great.
Billionaire investor David Tepper is buying more of “everything” related to China after Beijing rolled out sweeping stimulus measures that exceeded expectations…. Tepper also indicated that he’s removed his self-imposed guardrails on Chinese stocks. “I have limits, historic limits. I probably said a long time ago, I don’t go above 10% or 15%. Well, that’s probably not true anymore,” he told CNBC. Still, he said he’d set “another new found limit” in a pullback.
And, well, a new found limit he just may have to set.
Analysts say some challenges that are likely to arise during implementation include the ability and willingness of investors to take risks, and the gestation period it takes for the support to positively affect economic data points, which will signal whether the Chinese economy’s fundamental challenges have been addressed…. Some say the fund, in this first phase, isn’t big enough to be meaningful. CreditSights said in a note that the liquidity facility announced by the central bank in the first phase accounts for only 1% of Chinese equity markets’ market capitalization….
“The scale of the rebound and its sustainability hinge on a successful breakout from deflation and corporate earnings growth bottoming out,” Morgan Stanley [analyst Laura] Wang said.
David Tepper Buys ‘Everything’ China-Related on Beijing Easing [Bloomberg]
China-focused hedge fund performance juiced by stimulus, says Goldman Sachs [Reuters via Yahoo!]
China’s Politburo Supercharges Stimulus With Housing, Rates Vows [Bloomberg via Yahoo!]
China Weighs $142 Billion Capital Injection Into Top Banks [Bloomberg]
China Market Support May Fizzle Out If Key Issues Remain Unsolved [WSJ]
