(Bloomberg) -- Pictet Asset Management’s Young Jae Lee was among the scores of money managers who bought into China’s reopening rally in late 2022. He quickly pivoted as the bounce faded, a call that helped his fund beat virtually all its peers last year.

Now the undemanding valuation on Chinese stocks is not enough to persuade him to boost positions, even after Beijing was said to be weighing a plan to mobilize about $278 billion to shore up the nation’s equities.

“China is apparently very, very cheap but lacking positive changes at the moment,” said Lee, a senior investment manager who helps oversee Pictet’s Global High Yield Emerging Equities Fund. “If I only look at the valuation, I want to buy but it could be a value trap if fundamental is continuing to deteriorate.”

Lee’s skepticism speaks to the general sense of caution that has greeted Beijing’s plans for more forceful measures to revive its ailing stock market, and underscores the broader shift away from Chinese assets. For those like Lee whose previous wagers on China backfired, it’s not hard to see why.

Pictet’s Global High Yield fund downgraded China to slightly underweight in the second quarter of 2023 when the reopening rally fizzled out — a move that helped contain the vehicle’s losses. 

“Some of the stocks we owned in China, we lost quite a bit of money especially sectors like property,” Lee said in an interview from London. “But as a whole country, we didn’t lose as much money in China because we were underweight.” 

The fund delivered a 30% return in 2023, beating 99% of peers, according to data compiled by Bloomberg. Bullish calls on oil-related and artificial intelligence names drove the gains, according to Lee. Gains from Petroleo Brasileiro S.A. and chipmakers such as Taiwan Semiconductor Manufacturing Co. helped offset the losses fueled by Chinese property stocks, he added.

Read: Hedge Fund Stars Who Got China Wrong Are Paying a Big Price

Beijing needs to offer “stronger policy support” to bolster confidence, according to Lee. The view echoes that of other money managers such as the global wealth management arm of UBS Group AG which has called for “punchier” policies to reverse the downtrend in Chinese shares.

Beijing’s latest rescue plan has had a limited impact so far, with the CSI 300 Index falling 0.5% on Wednesday after ending 0.4% higher the previous day.

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