Strategy of betting on Chinese value stocks may be losing its winning edge, says CICC

Investment banks from China International Capital Corp (CICC) to Founder Securities are becoming sceptical about value trades, one of the most successful strategies for Chinese stocks so far this year, questioning whether the ploy will work for the rest of 2021.

Bets on the likes of Bank of China, Country Garden Holdings and China Mobile have rewarded investors with an average return of 27 per cent in 2021, the second most successful tactic after chasing dividend names, according to Bloomberg data. Buying into growth stocks such as Tencent Holdings and Sino Biopharmaceutical, a successful trade that returned 15 per cent last year, has incurred an average loss of 21 per cent year-to-date, the data shows.