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Veteran Predicts 50% A-Share Surge; Hedge Funds to Regret Selling
A Wall Street veteran who once predicted that the CSI 300 could surge to 6,000 points within a year has spoken out again.
Recently, Jeff deGraaf, a seasoned Wall Street figure, former Chief Technical Analyst at Lehman Brothers, and Co-founder and CEO of Renaissance Macro Research, stated that in his 35 years on Wall Street, he has rarely seen such a "confluence of favorable conditions" for a long-term bull market—"skepticism, valuations, stimulus, momentum, and trend changes" are all in place.
DeGraaf indicated that hedge funds that chose to sell a record number of Chinese stocks during the recent correction of the CSI 300 will "regret it," advising investors to "keep stops and reject dogma" when betting on China.
In deGraaf's view, it is no coincidence that China has introduced a series of supportive measures for the capital market during market downturns:
"The market is also driving policy, just as policy drives the market."
"We believe that China's policy response is a form of self-preservation, a reaction to weakness, similar to the 'whatever it takes' pledge that saved the Euro crisis during the 'Draghi moment'."
Previously, deGraaf boldly predicted in an interview that the CSI 300 could reach 6,000 points within 12 months at the earliest, which, based on yesterday's closing price, implies that the index still has about 50% upside potential.
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Last week, billionaire hedge fund founder and long-term China bull David Tepper also expressed surprise at the magnitude of the policy and said he would place a big bet on Chinese stocks, buying everything.
Tepper said in an interview with CNBC that after the Federal Reserve's rate cut, his next big bet would be to buy all China-related stocks.
Currently, Tepper has already bought more "large-cap tech stocks" and indicated that his future investment limit for China-related stocks may double."We have increased our holdings in some Chinese stocks. I may have said in the past that I would not exceed a position limit of 10% or 15%, but that may no longer be the case."
"I have essentially bought all the stocks, and I would be happy to see a pullback in stock prices. When the pullback occurs, I may set a new investment limit."
Tepper also pointed out that Chinese stocks are cheaper than American stocks:
"You will see that the price-to-earnings ratios of these large-cap stocks are in the single digits, while the growth rates are in the double digits, which is in stark contrast to the price-to-earnings ratio of the S&P 500 index, which is over 20 times."
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