Shanghai Banxia Investment Management Center, one of China’s top-performing macro hedge funds, believes that any pickup in the country’s consumer spending following the lifting of ‘Zero Covid’ measures, will be mild, making a stock market rally less likely than many investors are predicting, according to a report by Bloomberg.
Shanghai Banxia Investment Management Center (Banxia), one of China’s top-performing macro hedge funds, believes that any pickup in the country’s consumer spending following the lifting of ‘Zero Covid’ measures, will be mild, making a stock market rally less likely than many investors are predicting, according to a report by Bloomberg.
Expecting a strong recovery in China’s consumption after the dismantling of its Covid curbs based on what happened overseas is “problematic,” Shanghai Banxia Investment Management Center, which manages more than 10 billion yuan ($1.5 billion), said in its December investor letter.
The CSI 300 Consumer Discretionary Index may have surged 23% since the end of October 2021 as traders gamble on consumer spending fuelling growth following three years of lockdowns, but the report cites Banxia December investor letter as saying that the firm expects consumer-driven growth to be “very mild” due to high levels of household debt and a slowdown in the property market.
Writing in the letter, Banxia founder Li Ben stated: “Consumption stocks are very likely to subsequently face a reality that falls short of expectations along with a stagnation and correction in share prices.
The Banxia Macro Fund gained 1.3% last year, extending total returns since inception at end of 2017 to 240%, according to the letter.
