Writes:
Options traders keep finding new reasons to get bullish on Chinese stocks.
First an acceleration in government spending sent the biggest Chinese exchange-traded fund in the U.S. to a three-year high in September. After that rally faded, bulls turned their attention to the Shanghai-Hong Kong exchange connect. When inflows as the link debuted last week proved disappointing, optimists were redeemed by China?s surprise interest-rate cut.
The result is that options traders are now the most bullish on record, sending the cost of three-month puts on the iShares China Large-Cap ETF to an all-time low relative to calls on Nov. 21. JPMorgan Chase & Co., Barclays Plc and UBS AG say the People?s Bank of China?s first interest-rate cut since 2012 will be followed by further reductions as policy makers act to shore up growth in the world?s second-largest economy.
?There?s a lot of interest in China globally,? Nader Naeimi, who helps manage about $125 billion as the head of dynamic asset allocation at AMP Capital Investors Ltd. in Sydney, said by phone on Nov. 24. ?I expect to see more and more demand for Chinese shares. The momentum has turned around.?
The Shanghai Composite Index is set to post a seventh straight monthly gain, the longest winning streak since 2009. Deutsche Bank?s X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) jumped 5.1 percent in New York on Nov. 21 to the highest level since its U.S. debut a year earlier. The iShares China Large-Cap ETF surged the most in nine months.
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