China Hedge Fund Banxia Warns Against Piling Into Small Caps
- Smaller stocks will see reversal over next few years: Li
- Flagship fund fell 25% from a peak in the middle of last year
Li Bei
Photographer: Qilai Shen/BloombergThis article is for subscribers only.
A top Chinese macro hedge fund is warning investors against piling back into small-cap stocks, saying the cohort will face a “mid-to long-term reversal.”
They “are small, expensive, and trashy,” Li Bei, founder of Shanghai Banxia Investment Management Center, wrote in a WeChat post. Instead of small-cap index enhanced quantitative products, she has recommended those pegged to the CSI 300 Index since the fourth quarter, given that the former will likely undergo a “profound reversal” in the next two to three years.