Wall Street Vet More Optimistic Than "Bull Market Herald": Shouts CSI 300 to Soar to 6,000

• 2024-09-15
• News

A seasoned Wall Street market strategist, Jeff deGraaf, co-founder and CEO of top Wall Street investment firm Renaissance Macro Research, recently stated in an interview that earlier this week, as the CSI 300 Index corrected after a 35% gain over 10 trading days, global hedge funds sold a record number of Chinese stocks. DeGraaf indicated that these institutions would face a world filled with regret. He predicted that one of the benchmarks of the A-share market, the CSI 300 Index, could surge by 50% within 12 months, challenging the 6000-point mark.

This Wall Street veteran, who has been in the financial industry for many years, holds an extremely optimistic bullish stance on the Chinese stock market (including Hong Kong stocks and A-shares). He emphasized that in his more than thirty years of stock investment career, there have been few such perfect policy combinations, stating, "These stars are so perfectly aligned to drive a prolonged uptrend."

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"Doubt dissipates, valuation advantages, massive stimulus scale, momentum, and trend changes. These factors are all present there," he emphasized in the interview. "This is one of the best lineups I've seen in my 35-year career."

Similarly, Mark Mobius, a senior Wall Street investor known as the "Godfather of Emerging Markets," said in a recent interview that if policymakers continue to introduce measures to support the market, the rebound in the Chinese stock market could continue.

The latest bullish views of Wall Street veteran deGraaf and Mobius, who has been investing in emerging markets for decades, perfectly align with the views of Wall Street financial giants such as Goldman Sachs and Citigroup. They all believe that the crazy surge in the Chinese stock market (including Hong Kong stocks and A-shares) that began in late September is not a flash in the pan, but rather, under the expectation of strong stimulus policies for the financial market and the real economy by the government, this surge has opened the curtain on a new round of an epic "long-term bull market" in the Chinese stock market.

This Wall Street veteran predicts the CSI 300 Index will break through 6000 points.

It is against this backdrop that this senior investor, who once worked at Lehman Brothers and Merrill Lynch, has now become one of the most optimistic bulls on the Chinese stock market on Wall Street. DeGraaf predicted that one of the benchmarks of the A-share market, the CSI 300 Index, would reach 6000 points within the next 12 months, implying a potential increase of more than 50%. In comparison, the CSI 300 Index closed at 3997.79 points on Thursday.

The CSI 300 Index forecast given by this Wall Street veteran is even higher than the 4600-point target given by Goldman Sachs, known as the "bullish flag bearer of the global stock market," and higher than the 4900 points given by another Wall Street giant, Citigroup.

It is understood that Wall Street veteran deGraaf was rated as the best technical strategist for 11 consecutive years (as of 2015) in the annual survey of Institutional Investor on Wall Street. He said in the interview that it was no coincidence that last month the Chinese stock market tested the year-to-date low point, and Beijing introduced the most aggressive monetary easing policy in years. "The market drives policy, and policy drives the market," he mentioned in the interview.

His latest forecast is extremely optimistic compared to the latest revision of the CSI 300 Index target by another Wall Street giant, Morgan Stanley (i.e., the target position by June 2025 is 4000 points). Morgan Stanley, which holds a cautious bullish stance on the Chinese stock market, implies that there is almost no room for the CSI 300 Index to rise after Thursday's closing.On Wednesday, the index plummeted by 7.1%, with the Hong Kong stock market experiencing an even deeper decline. This was the second trading day after the reopening of China's A-share market following the National Day Golden Week holiday. Despite a 1% increase on Thursday, the absence of any further significant stimulus measures at a key policy meeting earlier this week seems to be cooling the enthusiasm for the Chinese stock market, which was driven by expectations of policy stimulus, according to some strategists who are skeptical about the Chinese stock market.

De Graff is optimistic about the long-term upward trend in the Chinese market but stated that investors also need to "maintain stop losses and avoid stubborn emotions." Mark Mobius, a senior Wall Street investor known as the "Father of Emerging Markets," said that the bearish sentiment in the Chinese stock market has been completely broken, so it can be expected that the market will continue to show a strong bullish stance.

Currently, Wall Street traders focusing on the Chinese stock market are waiting for the results of the Ministry of Finance's briefing on fiscal policy on Saturday.

De Graff said in an interview: "We believe that the policy response is self-preservation and a counterattack against opposing voices. China may usher in a 'whatever it takes moment' similar to Mario Draghi's. In the eyes of some Wall Street strategists who have witnessed the eurozone's exit from the European debt crisis, the timing of these heavy stimulus measures proposed by the Chinese government is comparable to the 'whatever it takes moment,' similar to the firm promise made by former ECB President Mario Draghi to safeguard the eurozone's common currency during the European debt crisis in 2012.

This Wall Street veteran, who has been through many battles in the financial industry, also downplayed the potential risk impact of the upcoming U.S. presidential election on the Chinese stock market. "This is just a small episode, possibly insignificant, and the market's reaction will be an important opportunity."

The sound of "long China" resounds on Wall Street.

The government's large-scale stimulus plan has triggered a new round of foreign capital buying and a frenzy of raising investment ratings for the Chinese stock market. Some foreign institutions that have long been bearish on the Chinese stock market (including Hong Kong stocks and A-shares), including global asset management giant BlackRock Inc. and Wall Street financial giant Morgan Stanley, have also turned bullish and are pushing the Chinese stock market to rebound with real money. Wall Street investment banks and hedge fund institutions that have long been cautious about the Chinese stock market have suddenly turned collectively bullish on Hong Kong stocks and A-shares.

According to EFPR's statistical data, in the week ending October 2, the emerging market equity funds tracked by EFPR recorded the second-largest weekly capital inflow this year, and almost all of these inflows rushed into the Chinese stock market (including Hong Kong stocks and A-shares).

BlackRock, which has long been cautious about the Chinese stock market, recently stated that it would upgrade its rating on Chinese stocks from "neutral" to "overweight." The institution believes that given the near-record discount of the Chinese stock market compared to developed market stocks, and the presence of strong catalysts that may stimulate investors to re-enter the market, there is still room for major institutions to moderately increase their holdings of Chinese stocks in the short term.

The world-renowned billionaire investor David Tepper advised investors to "buy everything" related to China. He attributed his large bet on the Chinese stock market to the Chinese government's large-scale stimulus package. Tepper, who followed the global AI craze in 2023, now shouts "buy everything" related to China and sell high-valued U.S. tech stocks such as Nvidia.Goldman Sachs, known as the "standard-bearer of the global stock market bull market," has upgraded its rating on Chinese stocks to "overweight" in its latest report, and has raised its target level for the CSI 300 Index from 4,000 to 4,600. The CSI 300 Index closed at 4,256.10 points on Tuesday. Goldman Sachs has also raised its target level for the MSCI China Index, which includes core Chinese assets such as Alibaba, Tencent, and Kweichow Moutai, from 66 to 84, compared to the MSCI China Index closing at 70 points on Thursday. In terms of industry allocation, Goldman Sachs said that due to increased capital market activity and improved asset performance, insurance and other financial sectors (such as brokers, exchanges, and investment institutions) have been upgraded to "overweight." At the same time, Goldman Sachs maintains its "overweight" stance on Chinese internet and entertainment, technology hardware and semiconductors, consumer retail and services, and daily necessities.

Another major Wall Street bank, Citigroup, recently published a research report stating that it has raised its target for the Hang Seng Index, the benchmark index for Hong Kong stocks, by 24% to 26,000 points by the end of June 2025, and set the target for the end of 2025 at 28,000 points. Citigroup has also raised its target levels for the CSI 300 and MSCI China Index for the first half of next year to 4,600 and 84 points, respectively, and set the target levels for the end of next year at 4,900 and 90 points.

The well-known Wall Street investment institution Bernstein recently reiterated the institution's "tactical overweight position" on Chinese stocks and stated that Chinese stocks will rise further under policy stimulus. The institution wrote in a research report released on Thursday: "The recent series of stimulus policies and fiscal stimulus tone introduced by the Chinese government have triggered a strong bullish response from investors, with a large amount of international capital flowing into the Chinese stock market, and the scale of passive capital inflows from the United States has also reached a historical high. After a series of policies have been introduced, we have turned to an optimistic position and still believe that the risk-reward of the Chinese market is biased towards the upside."