To The Moon

Chinese stocks have been outperforming this month and Wall Street institutions are bullish, with data showing that USinvestors are trying to seize the opportunity to add to their bets on Chinese stocks.

US investors are bullish in Chinese stocks judging by Options contracts

According to Market Chameleon, a US stock and options information site, as of last Friday

(1) Open contracts in calls on the $FXI(FXI)$ , a US-listed ETF that tracks large-cap Chinese stocks traded on the Hong Kong Stock Exchange, reached an all-time high of 4,447,800 contracts, while open puts stood at 1,724,400 contracts.

The number of open call options contracts is about 1.6 x higher than the number of put options contracts.

(2) The $6.58 billion $MCHI(MCHI)$ , the largest China ETF in the US market, has 46,467,000 open call options, near the highest level in the past year.

The number of open contracts in MCHI-linked puts is 26.91 million, which is below the average for the past year.

The number of open call options contracts is also 1.6 times higher than the number of open put options contracts.

3) The $5.5 billion overseas Netflix China ETF, $KWEB(KWEB)$ , which tracks individual stocks of Chinese Internet companies, has more than three times as many open calls as open puts.

Summary: The fact that open positions in calls far exceeded those in puts suggests that foreign investors are turning positive on Chinese stocks.

From November 1 to 21, the net inflow of northbound funds has reached 39.638 billion yuan, of which only last week, the net buying of A shares by northbound funds exceeded 32.2 billion yuan, the second highest net buying in a single week this year.

Extraordinary performance of Chinese stocks in November

As of last Friday, since the beginning of this month, the Hang Seng Index rose about 14%, up more than 20% from the recent low;

$NASDAQ Golden Dragon China Index(HXC)$ rose about 23%, both into the bullish range, HXC this month is expected to be the best performance in history;

MSCI China Index rose nearly 24%, will be the best performance since 1999.

Wall Street Unanimously Bullish on China Stocks

1) Morgan Stanley, which has always been cautious, raised its price target for Chinese stocks last week, expecting the MSCI China Index to rise 14% by the end of next year.

Jonathan Garner, Morgan Stanley's chief Asia and emerging markets equity strategist, said in a media interview last week that

China's markets will perform better as the good news continues and the bull market is likely to last for several quarters.

2) Goldman Sachs reiterated its confidence in Chinese stocks last week.

In a report released last Friday, Goldman maintained its Overweight rating on the MSCI China Index, expecting the MSCI China Index and CSI 300 Index to return as much as 16% over the next 12 months. The returns are even higher at 19% and 21% when exchange rates are factored in.

Goldman Sachs also upgraded China and Hong Kong stocks from underweight to overweight.

3) Citi's Robert Buckland upgraded Hong Kong to Overweight in Asia, expecting that adjustments inpandemic prevention and real estate policies should boost corporate earnings.