China's Stimulus Bonanza: Billionaire Investor Tepper Sees Massive Upside in Chinese Stocks

Billionaire investor David Tepper is growing increasingly bullish on Chinese stocks, citing the country's recent fiscal stimulus measures as a major catalyst for the market. Tepper believes China's stock market is more attractive than the US market due to valuation differences, and he is not holding back on his enthusiasm for the opportunities he sees in the world's second-largest economy.

Unleashing the Stimulus Bazooka: China's Bold Moves to Revive Its Markets

Cutting Rates, Boosting Liquidity, and Encouraging Buybacks

China's central bank has taken a series of bold steps to support its stock market, including cutting key interest rates, providing liquidity support, lowering bank reserve requirements, and even encouraging company stock buybacks. Tepper sees these measures as a clear sign that the Chinese government is determined to prop up its markets and stimulate economic growth."Encouraging buybacks of stocks. Ok, this is China. This is stock buybacks. Not only encouraging it, lending you money to do it," Tepper said, highlighting the unprecedented nature of China's interventions.The billionaire investor believes these stimulus measures have exceeded market expectations, and he is confident that the Chinese authorities will continue to take further action to support the economy and the stock market.

Dovish Rhetoric from the PBOC

Tepper also pointed to the dovish comments from the People's Bank of China (PBOC) governor, Pan Gongsheng, as a positive sign for the market. The PBOC chief's promise to "do more and more and more" has further bolstered Tepper's bullish outlook on Chinese stocks."This is very strange language, especially for any central banker, but especially over there," Tepper said, underscoring the unusual nature of the PBOC's rhetoric.

Surging Chinese Tech Stocks

The market has already responded positively to China's stimulus measures, with large-cap Chinese tech stocks like Alibaba, PDD Holdings, and Tencent Holdings surging more than 7% on Thursday. The broader iShares MSCI China ETF also soared 8% on the same day and is up more than 16% this week alone.Tepper believes these gains are just the beginning, as Chinese stocks remain significantly undervalued compared to their historical levels.

Valuation Differences Favor Chinese Stocks

According to Tepper, Chinese stocks are trading at "single multiple PEs, with double-digit growth rates for the big stocks that trade over here." This stark contrast with the US market, which Tepper believes is not as attractively valued, has further bolstered his bullish stance on China."Even with the recent moves they're like on a flat-line low compared to where they have been in the past," Tepper said, suggesting that Chinese stocks have ample room for further upside.

Shrugging Off Potential Trade Tensions

Tepper believes that even if steep tariffs from a potential Donald Trump presidency were to materialize, it would not significantly impact his bullish view on Chinese stocks. He argues that the "internal stimulus" measures taken by the Chinese government would be enough to offset any negative effects from trade tensions."Obviously this is incredibly good for very undervalued Chinese equities, especially when the government is encouraging buybacks," Tepper said, emphasizing his conviction in the Chinese market.

Selective Approach to US Stocks

While Tepper is bullish on Chinese stocks, he is taking a more selective approach to the US market. He highlighted US casinos with exposure to China, such as Wynn Resorts and Las Vegas Sands, as well as companies exposed to the power demand of the AI tech trade, as potential buys.However, Tepper is not as enthusiastic about the overall US market, stating that he "doesn't love the US markets on a value standpoint." Nevertheless, he is cautious about being short on US stocks, given the potential for continued easing measures and a relatively strong economy.

Tepper's Biggest Bets on China

Tepper's largest position as of June 30 was Alibaba, which made up 12% of his portfolio. He hinted that he is buying more of the e-commerce giant, stating that his previous limits on position sizes may no longer apply.In addition to Alibaba, Tepper also owns shares of PDD Holdings, Baidu, the KraneShares China Internet ETF, and JD.com, further demonstrating his conviction in the Chinese market.