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The sudden shift in Chinese policy has boosted many different
asset classes, from commodities and mining stocks to currencies
and equity markets in popular tourist destinations.
Hong Kong's share benchmark, the Hang Seng Index closed on
Friday at an over six-month high ahead of the Lunar New Year
Holiday. Chinese onshore blue chips went into the break at a
five-month peak.
The BofA data also showed weekly flows of $14.4 billion into
bond funds, $7.5 billion into equities, $0.6 billion into cash
and $0.6 billion from gold.
European equities witnessed their first weekly inflow in almost
a year. BofA said there were $0.2 billion of inflows to European
stock funds, the first inflows in 49 weeks.
Europe has benefited both from China's reopening as well as
recent declines in gas prices.
BofA's "Bull & Bear indicator" is at 3.5, a 10-month high driven
by the inflows into emerging markets.
Nonetheless, the note also says that markets are still facing
several major uncertainties despite the recent optimism, as
central banks near the end of their aggressive interest rate
hikes, as well as the possibility of an economic "hard landing"
and political tension in the United States around its debt
ceiling.
"We are in the trickiest part of the investment cycle:
tightening ending but easing far from beginning, inflation over
but recession not yet begun, China reopen vs US recession…little
wonder Wall St narratives (are) changing quicker than a TikTok
video," it said.
(Reporting by Alun John, editing by Amanda Cooper and Emelia
Sithole-Matarise)
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