Business Feb 27, 2023
Mistrust of Xi endangers one of Wall Street’s favorite trades
Money managers looking for China to rebuild trust are getting mixed regulatory messages from Beijing.
Money managers looking for China to rebuild trust are getting mixed regulatory messages from Beijing.
Some of the biggest players in global markets are turning increasingly bullish on Chinese assets.
The optimism hinges on expectations Xi will usher in a more benign investing environment after the twice-a-decade Communist Party congress in October.
Hope that dramatic interventions five months ago has turned into skepticism over whether policymakers will do whatever it takes to bolster financial markets.
Money managers once enticed by China’s juicy yields and huge tech companies now say reasons to avoid the country outweigh incentives to buy.
The city's stock market has tumbled this year at one of the fastest rates globally, home prices are falling and signs of capital flight are multiplying.
Unlike in 2020, when Beijing was able to limit disruptions to its manufacturing hubs and rely on global liquidity to shore up investor confidence, this time it has to go at it alone.
A growing list of risks is turning China into a potential quagmire, with the central question being what could happen when the country goes to great lengths to achieve its leader’s goals.
The government in Beijing showed little regard for those same investors last year when it unleashed a series of crackdowns on the country’s most profitable companies.
Even though it’s unclear whether the beaten-down sector has reached a turning point, traders are having a hard time turning down bets that things will improve.