The nascent rebound in Chinese shares is at risk of becoming yet another false dawn as foreign investors seem unconvinced that policymakers can revive a faltering economy.
US and European long-only fund managers were net sellers of Chinese and Hong Kong stocks in July, according to Morgan Stanley, which is now advising clients to take profits on the recent rally and has downgraded China to equalweight. The FTSE China A50 Index is the only one of 10 major global benchmarks tracked by Citigroup Inc. on which investors had a short position end-July.
That’s even as key indexes in China and Hong Kong capped their best month since January after the Politburo meeting, where top leaders signaled more support for the troubled real estate sector alongside pledges to boost consumption. The Hang Seng China Enterprises Index, which tracks major Chinese shares listed in Hong Kong, has fallen this week amid a risk-off global backdrop following a 6.1% surge over the previous five sessions.
