Zhihu Inc. (ZH)

Chinese stocks can finally be valued properly again without a significant discount. Why ?

Beijing is discussing with American regulators the logistics of allowing on-site audit inspections of Chinese companies listed in New York, Bloomberg cites sources. BABA extends rally to +18%. HANG SENG Tech rallies by another 10%. BILI Up 15%

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#BREAKING
China central cuts foreign exchange deposit reserve ratio of financial institutions by 1 percentage point to 8% from 9%.
The easing has begun !

#China $CNY $CNH

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BREAKING: CSRC official says uncertainty over audit issues for Chinese firms will soon be removed

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This is the beginning of the convergence of the valuation of Chinese and US equities which diverged heavily back in the second half of 2021.

Back in the second half of 2021, Chinese stock's valuations were hammered because of the governmental crackdown, delisting fears, and the slowing economy due to China's method of handling the virus, while US equities continued rally in that low-interest-rate environment.

The world was reopening while China until today is still shut. However, the market is forward-looking and it is future expectations that only matter.

Here are the potential coiled spring catalysts that can send Chinese stocks to greater highs :

1) Delisting no longer becomes an issue for sound Chinese companies. Delisting fears may come to an end as PBAOC has been having weekly meetings with the CSRC to sort out delisting issues. Buy big names and you will be fine.

2) The government has vowed to strengthen support of the real economy to achieve the annual GDP target. They've done this by cutting the reserve requirement ratio and may potentially lower interest rates, as they acknowledge the negative implications of the lockdown.

3) China reopens its borders in the coming year. This will not only be a catalyst to the Chinese economy but the world economy.

4) China's shift towards equity investments instead of overcrowded real-estate assets. China's CSRC says pension, bancassurance institutions, and various asset management institutions should "make good use of equity investment quota in full" and further expand the proportion of equity investment.

Don't miss the boat

Sincerely,
Zack

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