Chinese stocks ‘near all-time low’, says China Renaissance CEO

So far this year, the benchmark Shanghai composite (SHCOMP) the index fell 15%, while the Shenzhen Composite is down nearly 24%. Chinese stock markets opened higher on Monday but struggled to sustain those gains after authorities released dismal economic data for April.

“I think the market is about to bottom out now,” Fan Bao, CEO of China Renaissance, an investment bank and private equity firm, said in an interview with CNN Business in Hong Kong. Friday, referring to Chinese stocks. “I must say, [overall investor] the feeling is pretty bad.”

Bao said he believed China was not facing a crisis, but rather the debate had become “too negative” lately as global asset managers worried about opportunities investment in the world’s second largest economy.

“We actually see this as a great investment opportunity,” Bao said, sitting in front of a sign in his office that read, “BullMarket4ever.”

He added that his Beijing-based company, which invests in startups through several funds, had recently been able to secure deals at valuations that were half of what they were before.

“I don’t think people need to panic.”

Bao is motivated enough to remain optimistic – he is a current and former adviser to the Shanghai and Shenzhen stock exchanges, respectively.

His firm, which manages about $7.7 billion in assets, also relies heavily on the performance of Chinese tech firms, which have come under intense pressure over the past 18 months as regulators aimed to some of the biggest names in the industry.

China Renaissance treasury shares are down around 40% year-to-date in Hong Kong.

Bao is known as a seasoned trader in China, where he helped negotiate the 2015 merger between Meituan and Dianping, two of the country’s leading food delivery services. Today, the combined company’s “super app” platform is ubiquitous in China.
He and his team have also invested in US-listed Chinese electric vehicle makers. Nio (NIO) and Li Auto (LI), and helped Chinese internet giants Baidu (BIDU) and (J.D.) complete their secondary listings in Hong Kong.

Editing debate

Investor worries have been mounting recently over China, which is grappling with deep economic shocks as it continues to endure strict Covid-19 lockdowns, including an extended one in the financial hub of Shanghai.

At least 32 the cities of China are in total or partial containment, which could impact up to 187 million people across the country, according to CNN calculations.

The restrictions have disrupted virtually every aspect of business, leading to widespread supply chain shocks and an exodus of expatriates.
The issue has also exacerbated the slide in China’s stock markets, putting it among the worst performers this year, behind Russia, the Nasdaq and the S&P 500.
Chinese officials are
Private Chinese companies, especially in tech, had already weathered turmoil due to a historic regulatory crackdown that sent the stock price plummeting by Ali Baba (BABA), Tencent (TCEHY)and other titans.
last July, Goldman Sachs (GS) analysts said some of its clients had questioned whether Chinese markets had become “uninvestable”, citing regulatory pressure.
Chinese officials signaled some relief last month, pledging to support and “promote the healthy development” of the internet sector. But investors remain cautious.
Soft Bank (SFTBF)one of the world’s biggest technology investors, said on Thursday it was pursuing a cautious approach to investing in the country.

Despite its optimism, China Renaissance has also slowed its pace of new investment this year, according to Bao.

But he ignored major concerns, comparing current market conditions to other past downturns.

China faces
“Once in a while you would see this talk about, ‘Should we reduce exposure to China and… even [exit] China’,” he said, referring to the Asian financial crisis of 1997 and the bursting of the dotcom bubble in 2000.

Bao said that while he felt it was “very hard to stay calm these days,” he tried to keep his head down and stay focused on the big picture.

“For long-term investors, who have been through several cycles, usually in principle, it’s a good window to invest when people are feeling really down,” he said.

— CNN’s Beijing bureau contributed to this report.

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