The South China Morning Post reported on December 12 that foreign funds were active in stock markets while state-run funds have kept silent since mid-October.

Since November, global funds have purchased 81 billion yuan ($11 billion) worth of onshore stocks through the Stock Connect link. The biggest revival in 2 years was seen in the CSI 300 Index of onshore stocks, which jumped 12.5% last month. According to Stock Connect, the index increased 3.3% last week thanks to additional foreign inflows of $1 billion.

Goldman Sachs expects the fund inflows to increase in 2023. State-run funds, or the “National Team” in the market parlance, have been noticeably absent, if not completely absent, as bets on Beijing’s zero-COVID pivot lifted stocks out of the bear market.

Li Daxiao, chief economist at Yingda Securities in Shenzhen, said, “Foreign investors took action and successfully bottom-fished the Chinese market.”

He added, “It’s a pity that mainland investors have missed the chance.”

Most researchers and analysts are partial toward the “Buy China” chorus. For example, Morgan Stanley upgraded stocks in the MSCI China Index to overweight on December 4. Bank of America analysts suggested buying any dip caused by doubts about China’s reopening path. Montreal-based Alpine Macro also turned bullish on China about 6 months ago.

However, China’s state-run funds have remained quiet for almost 2 months since the Communist Party held its Congress.

Goldman analysts said, “Our national team activity indicator suggests no [market] intervention this week.”

Gary Ng, a senior economist at Natixis in Hong Kong, said, “The absence of market intervention has disappointed many mainland investors.”

He added, “But the Chinese government probably thought a slump [in October] would not impact economic stability, and decided not to burn the money.”

As stock rebounds, some skeptical investors question whether global money managers are really in the market for the long haul, or just trying to talk up the market for a quick return.

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