BNY’s Geoff Yu notes that both Chinese equities and the Chinese Yuan (CNY) are significantly under-owned compared to their Asia-Pacific peers, with cross-border holdings at notably low levels [1]. Yu emphasizes that China has been de-risked across asset classes, including equities, foreign exchange, and fixed income, and that the CNY is currently the worst-held APAC currency. However, he observes that flows are no longer showing aggressive selling, suggesting a shift in investor behavior [1].
Despite the lack of compelling fundamentals—such as unimproved data, earnings, and policy follow-through—Yu argues that the positioning setup is becoming more attractive. He points out that retail flows, a base in ownership, and increasing discussions about stimulus could mean that any stabilization in economic data or credible policy support might trigger a meaningful rebuild in exposure to China [1].
Yu concludes that even a modest recovery in fundamentals or policy credibility could create a significant re-entry opportunity for investors, given the currently depressed ownership levels of Chinese assets [1].
CONCLUSION
BNY’s analysis suggests that while Chinese assets remain under-owned and fundamentals are not yet strong, the current positioning offers a potential re-entry point if data stabilizes or policy support becomes credible. Investors may find opportunity in a modest rebuild of exposure, given the low levels of cross-border holdings and reduced aggressive selling. The market takeaway is cautiously optimistic, hinging on future improvements in fundamentals or policy action.