According to recent reports, global hedge fund giant Bridgewater’s “Onshore China Hedge Fund” has increased exposure to Chinese stocks and bonds. Previous rebounds in risk assets have propelled its first-quarter returns to 6.4%, exceeding most local competitors. Ray Dalio, the founder of the U.S. hedge fund Bridgewater Associates, has previously stated that Chinese assets are very attractively priced. “The critical question for me is not whether I should invest in China, but how much I should invest.”
Another foreign asset management giant, Ashmore, is reducing its positions in Indian stocks and designating China as the top investment choice for its emerging markets fund. Bloomberg reports that the fund has allocated 26% of its emerging market stock fund to China, while reducing the proportion for India to 12%.
Simultaneously, foreign expectations for China’s economic prospects are improving. Joe Hong, Chief Economist for Greater China at Bank of America Securities and Head of Asian Economic Research, mentioned in a recent report that due to first-quarter Chinese GDP and fixed asset investment data exceeding expectations, the GDP growth forecast for China this year has been revised upward from 4.7% to 5%.
Additionally, Bloomberg reported that Bridgewater’s onshore China hedge fund increased exposure to Chinese stocks and bonds, resulting in a first-quarter return of 6.4%, outperforming most local competitors.
According to Bloomberg, Bridgewater’s Shanghai-based private fund management subsidiary generated a 3.8% contribution to the All Weather Plus strategy during the All Weather Portfolio period. Active management by the team contributed 2.1% to the returns, showing increased support for the local economy and markets at that time.
Data indicates that Bridgewater registered as a securities private fund manager with the China Securities Investment Fund Industry Association on June 29, 2018.
Data from the China Securities Investment Fund Industry Association reveals that Bridgewater (China) Investment Management Co., Ltd. has a registered capital of 310 million RMB, with a total of 57 full-time employees, 51 of whom hold fund practitioner qualifications. Currently, Joanna Sun Alpert serves as the legal representative and general manager of Bridgewater (China).
According to Reuters, in January of this year, Bridgewater (China) raised a new fund of 2 billion RMB, increasing its assets under management in China to 40 billion RMB, marking a doubling of assets over the past year and leading significantly among wholly foreign-owned securities private fund managers.
In a bear market, Bridgewater (China) has attracted clients with its stable performance. According to reports, the fund’s flagship product, the All Weather Plus strategy, denominated in RMB, invests in stocks, bonds, and commodities, achieving a net return of 10.3% last year. As of April 3 this year, its performance has notably outperformed the CSI 300 Index.
Recently, Bridgewater founder Ray Dalio explained on social media why he continues to invest in China, emphasizing the country’s crucial role in “understanding the world” and “diversification.”
Dalio stated, “For me, investing in China has brought all the successes I hoped for, including demonstrating to investors how to achieve good results in both bear and bull markets.”
He further emphasized, “There is no such thing as a bad market, only bad decisions. The Chinese market is suited for my style of decision-making.”
Dalio’s optimism towards China, coupled with Bridgewater’s strong performance, has led to a rapid increase in Bridgewater’s assets under management in China.
Reducing investments in India, Emerging Markets Fund favors China According to Bloomberg, another foreign giant, Ashmore, is reducing its positions in Indian stocks and selecting China as its top preference for its emerging markets fund. The fund manager of London-based emerging markets equities, Edward Evans, indicated that the fund invested $6.5 billion in emerging stocks, allocating 26% to China while reducing India’s proportion to 12%. Evans believes that the valuation gap is the primary reason for this decision.
Based on the latest quarterly disclosures (up to March 31, 2024), Emerging Markets specialist asset management company Ashmore Group experienced net outflows of approximately $2 billion, reducing its assets under management from $54 billion at the end of December to $51.9 billion (approximately 380 billion RMB).
Numerous signs indicate a global capital flow back into the Chinese market. Reports from institutions such as Morgan Stanley suggest a renewed trend of capital inflow into A-shares. According to data from HSBC Holdings, over 90% of emerging market funds have begun increasing their holdings in the Chinese stock market.
Analysts believe that from a global perspective, A-shares are currently undervalued, highlighting their investment value. The ongoing signals of economic recovery in China further boost confidence among international investors.
China’s first-quarter GDP growth exceeds expectations In the just-concluded quarter, the Chinese economy delivered better-than-expected performance. Data revealed by the National Bureau of Statistics showed a 5.3% year-on-year increase in China’s GDP for the first quarter.
Following this, Morgan Stanley announced an upward revision of China’s economic growth forecast by 0.6 percentage points. The foreign institution indicated that robust exports and a strong manufacturing sector in the first quarter suggest that China’s economy is poised for stronger growth throughout the year. Prior to this, both Goldman Sachs and Citigroup released reports stating that China’s economy had a strong start in 2024. They expect the Chinese government’s GDP growth target of “around 5%” to be achievable, with both institutions raising their forecasts for China’s full-year GDP growth in 2024. Specifically, Goldman revised it from 4.8% to 5.0%, while Citigroup adjusted it from 4.6% to 5.0%.