While Goldman and Fidelity believe A-Shares are currently a bargain, a couple of large asset managers would like to differ – including emerging markets guru Mark Mobius:
“While we are already investing in China, our strategy is to wait until prices are so attractive that it’s time to look for further long-term opportunities… …(w)e believe that point is close with some stocks, but we probably haven’t hit the bottom yet.”
According to Bloomberg, BlackRock, UBS, and Mobius think A-Shares still have a long way to go before reaching fair value, with UBS Strategist Wenjie Lu adding, “(t)he downside risk for A shares is still big.”
Russ Koesterich, BlackRock’s global chief investment strategist, had this to say:
“Valuations are still about double where they were last summer… ..(g)iven the magnitude of the run-up, it is possible that even after a 30 percent correction, we haven’t gotten back to something approaching fair value.”
Unfortunately for them, small-cap “bargain hunters” have just driven the Shanghai Composite even higher, and with margin trading slowly making a comeback, it might take awhile for them to see A-Shares hit fair value again.
Photo credit: Bernd Thaller via Flickr