China's economic stimulus policies draw attention from Wall Street, U.S. investors favoring Chinese investments: "Cheaper than U.S. stocks by far!" Bullish on increasing positions.

Due to a series of comprehensive stimulus measures announced by Beijing to promote economic growth and stabilize the real estate market, the Chinese stock market has shown a strong upward trend. These measures have attracted the attention of Wall Street personalities, including billionaire investor David Tepper and Scott Rubner from Goldman Sachs, who are bullish on the Chinese stock market.

Comprehensive Bet on the Chinese Stock Market: Much Cheaper Than U.S. Stocks

Appaloosa Management founder David Tepper is increasing his stake in "everything China," citing stimulus measures that have exceeded expectations. Tepper mentioned in a recent CNBC interview, "I thought the Fed action last week would lead to a loosening of policy in China, but I didn't expect them to come out with such strong and powerful policies."

In the second quarter of this year, Tepper's hedge fund retained most of the Chinese stocks purchased earlier, even though they reduced some holdings in Alibaba and other U.S. tech giants. With the Chinese government committing to support fiscal spending and stabilize the real estate industry, Tepper has begun to increase positions in major Chinese companies such as Alibaba and Baidu.

Tepper stated, "We've slightly increased our holdings of Chinese stocks." He emphasized that despite recent price surges, Chinese stocks are still undervalued.

Goldman Sachs: Investors Should Seize Opportunities in the Chinese Stock Market

Scott Rubner, global market strategist and managing director at Goldman Sachs, also has a positive outlook on the Chinese stock market. According to Rubner, the long-awaited revival of the Chinese stock market may finally be here, and investors should seize this opportunity.

In a client report, Rubner stated, "I really think this time is different for China." He pointed out that currently, underweighting Chinese stocks globally is the "most consensus trade." Rubner also suggested that the Chinese market has quickly become a hot trade for November and December post-U.S. election, with a surge in demand for bullish options expiring at year-end.

Policy Announcements Drive Chinese Stock Market Rally, CSI 300 Index Could Rise Another 10%

The benchmark index for Chinese A-shares, the CSI 300 Index, rose 4.2% on Thursday, heading towards its largest weekly gain in nearly a decade. This uptrend also extended to Chinese stock indices listed in the U.S., with the Nasdaq Golden Dragon Index rising 11% in New York, marking its biggest gain in two and a half years.

The significant rise in U.S.-listed Chinese stocks is attributed to China's announced fiscal spending plan to boost consumption, control local government debt, and stabilize the real estate industry through subsidies and support to curb slowed economic growth and boost consumer confidence. Morgan Stanley analysts predict that the CSI 300 Index could rise another 10% in the short term.

Aggressive Money Printing to Rescue the Economy! China Unveils Largest Stimulus Package Since the Pandemic, Providing Short-Term Relief

Shift in U.S. Investors' Attitude Towards Investing in China

Prior to this recent rally, David Tepper and prominent short-seller Michael Burry were among the few figures in the hedge fund industry bullish on the Chinese stock market. Tepper recently hinted at adjusting his self-imposed limits on Chinese stocks, stating, "I have had a self-imposed limit, I've probably said I wouldn't go over 10% or 15%. But now things may be different." However, he plans to establish "another new limit" when the market experiences a pullback.

Tepper praised the swap mechanism introduced by the People's Bank of China, allowing securities, funds, and insurance companies to obtain funds from the central bank to purchase stocks. He commented, "It's a very good trade for me," and showed keen interest in the lending under the new mechanism. Regarding the tensions in U.S.-China trade relations, Tepper stated, "I don't care," emphasizing that these stimulus policies are primarily aimed at domestic consumption in China.

China Still Has the Opportunity to Attract Potential Capital Inflows

Scott Rubner pointed out that the global allocation of mutual funds to the Chinese stock market is only 5.1%, at a historical low, indicating room for increased investment. A potentially larger impact could come from passive investors, as of the $695 billion flowing into U.S. ETFs in 2024, only $49 billion went into Chinese ETFs. "China and emerging market assets do not benefit from passive fund flows daily as the U.S. market does, but this situation is changing," Rubner observed, noting a shift in global investment patterns.