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2021-08-16

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ANALYSIS-Valuing China assets no easy task after $1 trillion wipeout

China stocks go from EM leaders to laggards Analysts bullish on China heading into tumult MSCI China

ANALYSIS-Valuing China assets no easy task after $1 trillion wipeout

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{"i18n":{"language":"en_US"},"data":{"magic":2,"id":839064048,"tweetId":"839064048","gmtCreate":1629108437784,"gmtModify":1676529932629,"author":{"id":3581983437877810,"idStr":"3581983437877810","authorId":3581983437877810,"authorIdStr":"3581983437877810","name":"MuahIke","avatar":"https://static.tigerbbs.com/e2099720195bc33ed3eb0b89def4ceb1","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":2,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body>Hello please like this ty ☺️</body></html>","htmlText":"<html><head></head><body>Hello please like this ty ☺️</body></html>","text":"Hello please like this ty ☺️","highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/839064048","repostId":1126883057,"repostType":4,"repost":{"id":"1126883057","kind":"news","weMediaInfo":{"introduction":"Reuters.com brings you the latest news from around the world, covering breaking news in markets, business, politics, entertainment and technology","home_visible":1,"media_name":"Reuters","id":"1036604489","head_image":"https://static.tigerbbs.com/443ce19704621c837795676028cec868"},"pubTimestamp":1629101635,"share":"https://ttm.financial/m/news/1126883057?lang=en_US&edition=fundamental","pubTime":"2021-08-16 16:13","market":"sh","language":"en","title":"ANALYSIS-Valuing China assets no easy task after $1 trillion wipeout","url":"https://stock-news.laohu8.com/highlight/detail?id=1126883057","media":"Reuters","summary":"China stocks go from EM leaders to laggards\nAnalysts bullish on China heading into tumult\nMSCI China","content":"<ul>\n <li>China stocks go from EM leaders to laggards</li>\n <li>Analysts bullish on China heading into tumult</li>\n <li>MSCI China adjusted to 13.9 times P/E -MS</li>\n <li>Online insurers latest in cross-hairs</li>\n <li>Average 2021 returns -7% for China equity funds</li>\n <li>More distress evident in China credit</li>\n</ul>\nLONDON, Aug 16 (Reuters) - Any veteran investor will tell you that financial markets overshoot when trouble hits, but what if that market is the world’s second-largest economy and the government has decided the rules of the game have changed?\nChina's months-long regulatory crackdownherehas included big names in e-commerce, the gig economy, exam cramming and most recently online insurance. Close to $1 trillion in market value has been wiped off China Inc since February.\nFor big firms that also list on markets like Wall Street because it brings in international investment, 2021 is already the worst year since the global financial crisis.\nIt could spring back of course, but there’s the rub. Many analysts are convinced things will settle, but only the Beijing ruling elite know if and when that might be.\n“Investors have been jolted,” said Paul O’Connor, head of multi-asset at Janus Henderson.\n“This will weigh heavily on the outlook for profits, valuations and investor sentiment in China.”\nBut by how much?\nMorgan Stanley estimates MSCI China, which has seen one of its biggest lags on record versus world stocks this year, now trades at 13.9 times 12-month forward price-to-earnings, a 5% premium over MSCI’s broader emerging market benchmark.\nThat compares to about 17 times at the start of the year. It could get down to 13 times, says Morgan Stanley.\nAnalysts bullish on Chinese stocks heading into the tumult are now assessing the damage.\nIn March, before the latest crackdown, the average consensus 12 month share price target for stocks in the MSCI China Index, was about 40% higher than a year earlier.\nThe majority of analysts rate giants Alibaba Group Holdings and Tencent Holdings at least a “buy”, according to Refinitiv data, while most recommend a “hold” or “buy” for New Oriental Education &amp; Technology Group, whose stock has tumbled close to 90% this year.\n“The process of earnings downgrades and ratings downgrades has barely started,” said Janus Henderson’s O’Connor.\nEvergrande Property Services, part of China’s most indebted property developer, has already lost more than half of its market capitalisation from the peak. The share price is currently trading around 13 times forward price-to-earnings multiples, significantly lower than peers.\nPROBLEMS VS POSSIBILITIES\nHaving pumped in more than $800 billion over the past five years, investors are not about to fold their bets that China will offer the biggest boost to global financial markets in the decades to come.\nAnd while they acknowledge the changes are part of a broader plan to make economic growth more inclusive in the long run, they are mindful that future returns will depend much more on careful assessment of risk.\n“It’s important to distinguish between what is really volatility or noise and what is here to stay,” said Michael Bolliger, chief investment officer, emerging markets, at UBS Global Wealth Management.\nWhile some damaged sectors are likely to bounce back over time, others, like tutoring, which the government now wants to be non profit making, almost certainly won’t.\n“They changed almost the DNA of these companies,” said Bolliger.\nThe hit has been painful. EPFR data shows around $2 billion was pulled out of equity funds with significant China exposure in the first week of this month alone. Morningstar figures point to China-focused funds nursing at least 7% negative returns. For context, they made around 13% on average for the past five years.\nBUST OR BOON?\nIt has not only been stocks that have suffered.\nChina’s giant bond markets have been roiled by debt crises besetting firms such as Huarong and Evergrande, with the latter’s problems coming as the government seeks to slash leverage in the property sector.\nHere the moves point to rising distress. Chinese credit’s Z-score, a measure of market volatility, reached 0.7 standard deviations above its 15-year mean last month, from 1.8 in January.\nTypically, a score below 1.8 suggests looming bankruptcy.\n“Will the government allow these property developers to default and have a big debt crisis? I find it very unlikely,” said Gustavo Medeiros, Ashmore Group’s deputy head of research.\nWidening spread differentials have historically offered an attractive entry point, said Michele Barlow, SSGA’s Asia-Pacific head of investment strategy and research. But there’s still caution.\n“Investors will have to change their style of investing from being focused on yields to one based on fundamental analysis,” said Shamaila Khan, AllianceBernstein’s head of EM debt on the Global Markets Forum.\nAnd it may also put Chinese assets on a more sustainable footing, supporting earnings in the long-run.\nHaving been on the receiving end of China’s tumble this year, Hans Peterson, global head of asset allocation at SEB Investment Management, is staying in and may add if Beijing and the central bank signal fresh stimulus.\n“It is good to keep an eye on the possibilities in China, rather than the problems,” he said.","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>ANALYSIS-Valuing China assets no easy task after $1 trillion wipeout</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nANALYSIS-Valuing China assets no easy task after $1 trillion wipeout\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1036604489\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/443ce19704621c837795676028cec868);background-size:cover;\"></div>\n\n<div class=\"h-content\">\nReuters \n2021-08-16 16:13\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<ul>\n <li>China stocks go from EM leaders to laggards</li>\n <li>Analysts bullish on China heading into tumult</li>\n <li>MSCI China adjusted to 13.9 times P/E -MS</li>\n <li>Online insurers latest in cross-hairs</li>\n <li>Average 2021 returns -7% for China equity funds</li>\n <li>More distress evident in China credit</li>\n</ul>\nLONDON, Aug 16 (Reuters) - Any veteran investor will tell you that financial markets overshoot when trouble hits, but what if that market is the world’s second-largest economy and the government has decided the rules of the game have changed?\nChina's months-long regulatory crackdownherehas included big names in e-commerce, the gig economy, exam cramming and most recently online insurance. Close to $1 trillion in market value has been wiped off China Inc since February.\nFor big firms that also list on markets like Wall Street because it brings in international investment, 2021 is already the worst year since the global financial crisis.\nIt could spring back of course, but there’s the rub. Many analysts are convinced things will settle, but only the Beijing ruling elite know if and when that might be.\n“Investors have been jolted,” said Paul O’Connor, head of multi-asset at Janus Henderson.\n“This will weigh heavily on the outlook for profits, valuations and investor sentiment in China.”\nBut by how much?\nMorgan Stanley estimates MSCI China, which has seen one of its biggest lags on record versus world stocks this year, now trades at 13.9 times 12-month forward price-to-earnings, a 5% premium over MSCI’s broader emerging market benchmark.\nThat compares to about 17 times at the start of the year. It could get down to 13 times, says Morgan Stanley.\nAnalysts bullish on Chinese stocks heading into the tumult are now assessing the damage.\nIn March, before the latest crackdown, the average consensus 12 month share price target for stocks in the MSCI China Index, was about 40% higher than a year earlier.\nThe majority of analysts rate giants Alibaba Group Holdings and Tencent Holdings at least a “buy”, according to Refinitiv data, while most recommend a “hold” or “buy” for New Oriental Education &amp; Technology Group, whose stock has tumbled close to 90% this year.\n“The process of earnings downgrades and ratings downgrades has barely started,” said Janus Henderson’s O’Connor.\nEvergrande Property Services, part of China’s most indebted property developer, has already lost more than half of its market capitalisation from the peak. The share price is currently trading around 13 times forward price-to-earnings multiples, significantly lower than peers.\nPROBLEMS VS POSSIBILITIES\nHaving pumped in more than $800 billion over the past five years, investors are not about to fold their bets that China will offer the biggest boost to global financial markets in the decades to come.\nAnd while they acknowledge the changes are part of a broader plan to make economic growth more inclusive in the long run, they are mindful that future returns will depend much more on careful assessment of risk.\n“It’s important to distinguish between what is really volatility or noise and what is here to stay,” said Michael Bolliger, chief investment officer, emerging markets, at UBS Global Wealth Management.\nWhile some damaged sectors are likely to bounce back over time, others, like tutoring, which the government now wants to be non profit making, almost certainly won’t.\n“They changed almost the DNA of these companies,” said Bolliger.\nThe hit has been painful. EPFR data shows around $2 billion was pulled out of equity funds with significant China exposure in the first week of this month alone. Morningstar figures point to China-focused funds nursing at least 7% negative returns. For context, they made around 13% on average for the past five years.\nBUST OR BOON?\nIt has not only been stocks that have suffered.\nChina’s giant bond markets have been roiled by debt crises besetting firms such as Huarong and Evergrande, with the latter’s problems coming as the government seeks to slash leverage in the property sector.\nHere the moves point to rising distress. Chinese credit’s Z-score, a measure of market volatility, reached 0.7 standard deviations above its 15-year mean last month, from 1.8 in January.\nTypically, a score below 1.8 suggests looming bankruptcy.\n“Will the government allow these property developers to default and have a big debt crisis? I find it very unlikely,” said Gustavo Medeiros, Ashmore Group’s deputy head of research.\nWidening spread differentials have historically offered an attractive entry point, said Michele Barlow, SSGA’s Asia-Pacific head of investment strategy and research. But there’s still caution.\n“Investors will have to change their style of investing from being focused on yields to one based on fundamental analysis,” said Shamaila Khan, AllianceBernstein’s head of EM debt on the Global Markets Forum.\nAnd it may also put Chinese assets on a more sustainable footing, supporting earnings in the long-run.\nHaving been on the receiving end of China’s tumble this year, Hans Peterson, global head of asset allocation at SEB Investment Management, is staying in and may add if Beijing and the central bank signal fresh stimulus.\n“It is good to keep an eye on the possibilities in China, rather than the problems,” he said.\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"399001":"深证成指","399006":"创业板指","000001.SH":"上证指数"},"is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1126883057","content_text":"China stocks go from EM leaders to laggards\nAnalysts bullish on China heading into tumult\nMSCI China adjusted to 13.9 times P/E -MS\nOnline insurers latest in cross-hairs\nAverage 2021 returns -7% for China equity funds\nMore distress evident in China credit\n\nLONDON, Aug 16 (Reuters) - Any veteran investor will tell you that financial markets overshoot when trouble hits, but what if that market is the world’s second-largest economy and the government has decided the rules of the game have changed?\nChina's months-long regulatory crackdownherehas included big names in e-commerce, the gig economy, exam cramming and most recently online insurance. Close to $1 trillion in market value has been wiped off China Inc since February.\nFor big firms that also list on markets like Wall Street because it brings in international investment, 2021 is already the worst year since the global financial crisis.\nIt could spring back of course, but there’s the rub. Many analysts are convinced things will settle, but only the Beijing ruling elite know if and when that might be.\n“Investors have been jolted,” said Paul O’Connor, head of multi-asset at Janus Henderson.\n“This will weigh heavily on the outlook for profits, valuations and investor sentiment in China.”\nBut by how much?\nMorgan Stanley estimates MSCI China, which has seen one of its biggest lags on record versus world stocks this year, now trades at 13.9 times 12-month forward price-to-earnings, a 5% premium over MSCI’s broader emerging market benchmark.\nThat compares to about 17 times at the start of the year. It could get down to 13 times, says Morgan Stanley.\nAnalysts bullish on Chinese stocks heading into the tumult are now assessing the damage.\nIn March, before the latest crackdown, the average consensus 12 month share price target for stocks in the MSCI China Index, was about 40% higher than a year earlier.\nThe majority of analysts rate giants Alibaba Group Holdings and Tencent Holdings at least a “buy”, according to Refinitiv data, while most recommend a “hold” or “buy” for New Oriental Education & Technology Group, whose stock has tumbled close to 90% this year.\n“The process of earnings downgrades and ratings downgrades has barely started,” said Janus Henderson’s O’Connor.\nEvergrande Property Services, part of China’s most indebted property developer, has already lost more than half of its market capitalisation from the peak. The share price is currently trading around 13 times forward price-to-earnings multiples, significantly lower than peers.\nPROBLEMS VS POSSIBILITIES\nHaving pumped in more than $800 billion over the past five years, investors are not about to fold their bets that China will offer the biggest boost to global financial markets in the decades to come.\nAnd while they acknowledge the changes are part of a broader plan to make economic growth more inclusive in the long run, they are mindful that future returns will depend much more on careful assessment of risk.\n“It’s important to distinguish between what is really volatility or noise and what is here to stay,” said Michael Bolliger, chief investment officer, emerging markets, at UBS Global Wealth Management.\nWhile some damaged sectors are likely to bounce back over time, others, like tutoring, which the government now wants to be non profit making, almost certainly won’t.\n“They changed almost the DNA of these companies,” said Bolliger.\nThe hit has been painful. EPFR data shows around $2 billion was pulled out of equity funds with significant China exposure in the first week of this month alone. Morningstar figures point to China-focused funds nursing at least 7% negative returns. For context, they made around 13% on average for the past five years.\nBUST OR BOON?\nIt has not only been stocks that have suffered.\nChina’s giant bond markets have been roiled by debt crises besetting firms such as Huarong and Evergrande, with the latter’s problems coming as the government seeks to slash leverage in the property sector.\nHere the moves point to rising distress. Chinese credit’s Z-score, a measure of market volatility, reached 0.7 standard deviations above its 15-year mean last month, from 1.8 in January.\nTypically, a score below 1.8 suggests looming bankruptcy.\n“Will the government allow these property developers to default and have a big debt crisis? I find it very unlikely,” said Gustavo Medeiros, Ashmore Group’s deputy head of research.\nWidening spread differentials have historically offered an attractive entry point, said Michele Barlow, SSGA’s Asia-Pacific head of investment strategy and research. But there’s still caution.\n“Investors will have to change their style of investing from being focused on yields to one based on fundamental analysis,” said Shamaila Khan, AllianceBernstein’s head of EM debt on the Global Markets Forum.\nAnd it may also put Chinese assets on a more sustainable footing, supporting earnings in the long-run.\nHaving been on the receiving end of China’s tumble this year, Hans Peterson, global head of asset allocation at SEB Investment Management, is staying in and may add if Beijing and the central bank signal fresh stimulus.\n“It is good to keep an eye on the possibilities in China, rather than the problems,” he said.","news_type":1,"symbols_score_info":{"399001":0.9,"399006":0.9,"000001.SH":0.9}},"isVote":1,"tweetType":1,"viewCount":1402,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":23,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}