Investors in China are betting on small-cap growth shares to reignite returns as a shift away from blue-chips starts gaining traction.
While the mainland benchmark CSI 300 is little changed over the past month, the tech-heavy ChiNext Index is up 6.6% and the Nasdaq-style Star Board 50 Index has gained 15%. An MSCI Inc. gauge of small-cap growth stocks in China has risen 6%, in stark contrast to its economically sensitive value share equivalent which is down 5%.
With question marks over the strength of the Chinese economy, investors are turning toward secular growth stories in a hunt for exceptional earnings upside. For some that means the shares of smaller companies, which are expanding more rapidly than their more-established blue-chip peers.