(Bloomberg) -- Bridgewater Associates told investors it was “moderately bullish” on Chinese stocks as the prolonged rout made valuations attractive, a call made days before the country’s latest stock meltdown. 

The company’s China private fund management arm told local investors at a roadshow earlier this month that stocks are worth holding, according to people with knowledge of the matter. The Shanghai-based unit also said it’s “moderately bullish” on bonds, believing that policy will remain accommodative to support growth and there’s room for lower interest rates, the people said, asking not to be named as the discussions were private.

Bridgewater’s cautious optimism came just days before China markets tanked after President Xi Jinping unveiled his financial policy focus last week — emphasizing party control and regulatory scrutiny — and Beijing failed to issue stronger monetary policy support.

China’s benchmark CSI 300 Index hit a five-year low on Monday, while the downturn in markets has pushed mutual fund closures to a five-year high in another sign of waning investor confidence. 

Markets have since improved on Premier Li Qiang’s orders to stabilize slumping stocks, and the country’s deliberations for a $278 billion market rescue package. That said, many remain skeptical about whether it’s enough to end the rout.

The Hang Seng China Enterprises Index gained 1.6% on Wednesday morning, while the CSI 300 slipped 0.5%.

Global fund managers are navigating increasing turmoil in China, with even experienced investors being ensnared in the downturn. Singapore hedge fund Asia Genesis Asset Management Pte shuttered its $300 million macro fund after falling 18.8% in the first weeks of January after being bullish on China and shorting Japan assets. Long-time China bull Li Bei also admitted to mistakes after suffering the worst losses of her career. 

Bridgewater’s All Weather Plus strategy — which invests in assets including bonds and stocks — jumped 10.8% before fees last year, even after stock holdings contributed a negative 3.1% to the systematic All Weather portfolio, versus gains from bonds and commodities, according to the people. Active management by its team added 0.9% to the profit. 

The investment giant founded by Ray Dalio said it’s “moderately bearish” on commodities, partly because industrial metals are still under pressure due to deleveraging in the Chinese property market, according to the people. 

Multi-asset hedge funds in China averaged a return of 2.5% last year, beating a 2.45% loss for stock funds, according to data from Shenzhen PaiPaiWang Investment & Management Co. 

The outperformance has further bolstered Bridgewater’s appeal to local investors. Onshore assets under management have expanded to almost 40 billion yuan ($5.6 billion), the people said. 

Bridgewater declined to comment. Caixin reported the fund returns earlier. 

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