BEIJING, June 13 (Xinhua) — Foreign investors have continued to increase their investment in Chinese stocks and bonds, expressing a vote of confidence in the country’s long-term development.
As of June 10, China’s A-share market had seen net inflows of foreign capital over the past 10 consecutive trading days, the longest period of net inflows so far this year, according to the Market Tracker. Wind market.
Overseas investors invested 36.83 billion yuan (about $5.48 billion) in select Chinese stocks last week through the northern arm of the Stock Connect program, making it the biggest weekly increase since the start of the year, according to data from Wind.
The figure contrasts sharply with a net outflow of 45.1 billion yuan in March, when the resurgence of COVID-19 hit the country’s economy.
“Foreign investment in the Chinese financial market has seen quite a bit of swings this year,” said Monica Li, equity director at Fidelity International. The company now holds about US$6 billion in A shares.
She attributed the outflows to a range of factors, including the Russia-Ukraine conflict, U.S. Fed rate hikes and sporadic resurgences of COVID cases in China.
But as the world’s second-largest economy adjusted COVID restrictions in late May and made additional efforts to support the economy, the financial market has gradually warmed up.
China unveiled 33 detailed measures to stabilize its economy last month and the State Council ordered government departments to introduce practical measures.
Since then, sensitive foreign funds have rushed into the Chinese financial market. On May 20, the inflow of foreign capital into China’s A-share market reached 14.24 billion yuan, and on May 31, this number reached 13.87 billion yuan, the two largest inflows into the market. ‘year.
“In just two weeks in June, we saw overseas investors pile up their purchases of China A-shares, with the inflow exceeding the total in May,” Li said. .”
Li believes that the Chinese financial market will continue to remain attractive for foreign capital in the long term, given the country’s solid economic fundamentals. In addition, the country offers very attractive risk rewards in a context of growing global uncertainties.
Christiaan Tuntono, senior economist at Allianz Global Investors, said the outlook for China’s macroeconomic situation depends on the success of the government’s ambitious plan.
“The government is committed to supporting growth through greater infrastructure investment and greater political support,” he said, adding that he believed China was capable of achieving the goal. growth target of “around 5.5%” by stepping up investment in infrastructure.
In the bond market, China was also a bright spot among emerging economies. Data released by the Institute of International Finance showed that US$2 billion flowed into the Chinese bond market in May, bucking the trend of foreign capital outflows in most emerging markets last month.
The main investment driver in China’s bond market is demand for medium to long-term asset allocation, with the main holders being central banks, sovereign wealth funds and index-tracking passive funds, Matt said. Simpson, analyst at Gain Capital. .
Since the FTSE Russell had included Chinese government bonds in its World Government Bond Index, a total of US$10 billion will flow into the Chinese bond market every quarter until the end of 2024, a- he added.
There is still plenty of room for foreign investors to further increase their RMB holdings, said Wang Chunying, deputy director of China’s forex regulator.
RMB assets remain very attractive in many ways as they have stable investment returns and could diversify portfolio risk, Wang said.