A top Chinese macro hedge fund is warning investors against piling back into small-cap stocks, saying the cohort will face a “mid-to long-term reversal.”
They “are small, expensive, and trashy,” Li Bei, founder of Shanghai Banxia Investment Management Center, wrote in a WeChat post. Instead of small-cap index enhanced quantitative products, she has recommended those pegged to the CSI 300 Index since the fourth quarter, given that the former will likely undergo a “profound reversal” in the next two to three years.