Keep an eye on the recent jump in China’s domestic stock markets (up more than 10% year to date) for further signs of a longer-term re-rating, say fund managers. Long-time laggards because of structural problems, China’s local bourses in Shanghai and Shenzhen are undergoing a major overhaul, with listed companies restructuring their share capital to remove perceived stock overhangs, achieve fungibility and improve liquidity.
According to Frank Yao, chief investment officer of Hua An Fund Management, China’s second-largest domestic fund manager, based in Shanghai, the reforms are well on the way to a successful conclusion.
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