Darkening Gloom in Chinese Stocks Puzzles Wall Street Veterans
- Pessimism is driving equities lower, bucking earnings recovery
- Market watchers say geopolitical risks drive flows, sentiment
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Confidence is in short supply among Chinese investors these days, confounding analysts who say reasons to own the market are finally coming true.
The MSCI China Index’s valuations are shrinking and 12-month rolling returns are negative, a sign investors are pricing in an earnings contraction. Recession-proof trades are gaining traction, with a defensive strategy of buying dividend payers suddenly among the year’s most profitable.