A New Era? Big Money Managers Boost Buying of Chinese Stocks

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(List compiled by Andrew Dominguez. Data sourced from Finviz and Fidelity.)

The debt crises in America and Europe could reshape the Western world and encourage investors to look for investment opportunities elsewhere.

Over recent weeks, investors have seen Europe edge ever-closer to US-style fiscal consolidation, whereby richer member governments guarantee, and maybe even subsidize, the debts of their cash-strapped neighbors.

The proximity of a full-blown financial calamity from possible sovereign debt default-induced panic has even prompted British finance minister George Osborne to urge Eurozone leaders to pursue “greater financial integration” (via Reuters). Because the UK has historically been skeptical of increased European integration, Osborne’s statement is an indication that the fundamental structure of the Eurozone may be changing. Dramatically.

And now that the US has lost its pristine rating from ratings agency Standard & Poor’s, investors will have to grapple with the implications of the unprecedented downgrade.

For decades, US Treasuries have been considered one of the safest investments (and might still be). As a result, hedge funds, mutual funds, pension funds, and foreign central banks have purchased trillions of dollars of these bonds.

Will legal guidelines over the creditworthiness of their investments force large investment funds to dump their holdings of Treasuries? Or will funds choose to ignore the S&P rating – and possibly their contractual obligations – and hold on to their bonds (the US still has a perfect rating from Moody’s and Fitch, the other two large rating agencies)?

It seems like the latter is more likely, for now, with Treasury bond yields continuing to fall, a sign of confidence in US government debt and a lack of confidence in equity markets (via CNN).

Current market conditions have flummoxed even the savviest investors, some of whom decided to pull most of their funds out markets weeks before the worst even hit the fans.

One money manager, Zachary Karabell, believes that the world is “increasingly anchored by what used to be called the ‘emerging markets’ and hobbled by what used to be called the ‘developed world’” (via the Daily Beast). In particular, he focuses on India and China, pointing to the fact that Chinese demand has bolstered export revenues from commodity-rich countries like Brazil, Peru, Chile, and Australia.

Will the developing world come out on top as a result of the widespread uncertainty regarding American and Eurozone markets? Only time can tell.

To help you contextualize Karabell’s opinion, here is a list of Chinese stocks that have seen the largest hedge fund buying over the last quarter. Do you agree with smart money’s bullish sentiment regarding these companies?

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List sorted by net shares bought by institutional investors as a percentage of the share float.

1. eLong Inc. (LONG): Personal Services industry with a market cap of $693.03M. During the current quarter, institutional investors have bought 1.4M shares (net), which represents 49.82% of the 2.81M share float.

2. hiSoft Technology International Ltd. (HSFT): Business Software & Services industry with a market cap of $357.62M. During the current quarter, institutional investors have bought 4.3M shares (net), which represents 22.21% of the 19.36M share float.

3. MakeMyTrip Limited (MMYT): General Entertainment industry with a market cap of $677.83M. During the current quarter, institutional investors have bought 1.5M shares (net), which represents 16.41% of the 9.14M share float

4. Camelot Information Systems Inc. (CIS): Information Technology Services industry with a market cap of $499.29M. During the current quarter, institutional investors have bought 4.0M shares (net), which represents 15.07% of the 26.54M share float.

5. Hanwha SolarOne, Ltd. (HSOL): Specialized Semiconductor industry with a market cap of $365.18M. During the current quarter, institutional investors have bought 3.3M shares (net), which represents 14.85% of the 22.22M share float.

6. Yingli Green Energy Holding Co. Ltd. (YGE): Integrated Circuits Semiconductor industry with a market cap of $898.52M. During the current quarter, institutional investors have bought 11.9M shares (net), which represents 13.32% of the 89.36M share float.

7. VanceInfo Technologies Inc. (VIT): Information Technology Services industry with a market cap of $802.08M. During the current quarter, institutional investors have bought 2.7M shares (net), which represents 11.56% of the 23.35M share float.

8. 21Vianet Group Inc. (VNET): Application Software industry with a market cap of $663.81M. During the current quarter, institutional investors have bought 1.7M shares (net), which represents 11.40% of the 14.91M share float.

9. JinkoSolar Holding Co., Ltd. (JKS): Industrial Electrical Equipment industry with a market cap of $443.95M. During the current quarter, institutional investors have bought 1.2M shares (net), which represents 10.59% of the 11.33M share float.

10. AsiaInfo-Linkage,Inc. (ASIA): Security Software & Services industry with a market cap of $853.37M. During the current quarter, institutional investors have bought 4.4M shares (net), which represents 9.76% of the 45.08M share float.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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