David Tepper, founder of Appaloosa Management and one of the most successful hedge fund managers, has made a strong statement about his investment strategy in China, signaling a major bullish shift following recent economic stimulus measures from Beijing.
In a rare public appearance on CNBC, Tepper announced he was “buying everything” in China, including exchange-traded funds (ETFs), futures, and other assets.
Tepper’s move comes in response to a series of stimulus actions taken by China’s government aimed at revitalizing its economy, which has struggled due to a prolonged real estate downturn. The Chinese central bank recently implemented a rate cut and announced other monetary easing measures. Additionally, Beijing is reportedly considering a 1 trillion yuan ($142 billion) capital injection to boost lending, which has further fueled Tepper’s enthusiasm.
“I thought that what the Fed did last week would lead to China easing, but I didn’t expect them to go all in like they did,” Tepper said.
He referredto the Federal Reserve’s larger-than-anticipated rate cut. The aggressive actions taken by China’s leadership have led Tepper to exceed his own investment limits, signaling his confidence in the market’s potential.
Chinese equities have surged as a result, with the CSI 300 index up nearly 11% this week and Hong Kong’s Hang Seng index climbing more than 9%. ETFs tied to Chinese stocks have also seen substantial gains. Tepper remains optimistic, suggesting that if there’s a market pullback, he would further increase his investments.
“This is incredible stuff for that country,” Tepper remarked.
He underscored the significance of China’s stimulus efforts across bonds, currencies, and stocks.
Tepper’s bullish stance reflects his belief that China’s major companies are undervalued, with many offering single-digit price-to-earnings ratios and strong growth potential. He also highlighted the large cash reserves held by some of these companies, suggesting that a stronger Chinese currency could lead to increased stock buybacks.
While Tepper is clearly optimistic, some investors remain cautious about the long-term implications of China’s market rally, advising careful consideration of the risks involved.
Market Watch and Fore x Live contributed to this report.
