BEIJING: You may not agree with Ivan Vatchkov, Singapore-based chief investment officer for Asia at the hedge fund Algebris Investments (UK) Ltd., but there are good reasons to pay attention to what he says.WHAT THE GOVERNMENT (PROBABLY) WANTSA controlled rallyThe money manager told Bloomberg News that there may be opportunity in the equity markets of Shanghai and Shenzhen, where there are “lots of wonderful, wonderful businesses in China” that “occasionally are on sale because of the political, economic or market liquidity they have.”
Even if you disregard that fundamental strength, heed Beijing’s hints that politicians wouldn’t mind a controlled stock market rally.The latest and perhaps biggest hint came last week. The China Financial Futures Exchange announced relaxed position limits, lower fees and reduced margin requirements. Those curbs had been introduced amid the market crash in August 2015 as the leveraged asset class was perceived by authorities as having been used to both inflate indexes and accelerate their descent.
