BEIJING, Dec. 24 (Xinhua) – Since the beginning of this year, foreign-funded institutions have continued to double down on investment in China's A-share market.
According to data from 10jqka.com.cn, the cumulative net inflow of northbound funds, which refers to the foreign capital flowing into Chinese mainland shares from the Hong Kong stock market, has exceeded 180 billion yuan this year.
Besides, foreign investors have stepped up efforts to carry out extensive research on nearly 600 A-share listed companies this year.
Moreover, a number of foreign-funded institutions, such as Morgan Stanley, Goldman Sachs and HSBC, expressed their optimism about Chinese market, and predicted that foreign investment will remain an important source of incremental funds in the Chinese market.
-- foreign investors strengthen surveys on Chinese companies
Foreign-funded institutions have strengthened their surveys on A-share listed companies.
Data showed that a total of 1,715 A-share listed companies had accepted surveys as of December 20 this year, of which foreign-funded companies conducted research on 577 A-share listed companies, accounting for nearly 34 percent of the total, up 24.35 percent from a year earlier.
Specifically speaking, 14 companies including Hikvision, Mindray and Sunway Communication have accepted the surveys by more than 100 foreign-funded institutions; 17 companies including Estun, Goertek and Media Group have accepted the surveys conducted by over 50 foreign-funded institutions.
From the industry perspective, leading enterprises in biomedicine, semiconductor and other technology industries have received the most attention.
According to 10jqka.com.cn, among the top 50 listed companies in terms of the number of surveys by foreign-funded institutions, 14 companies belong to the electronics and electrical equipment industries, six belong to the biomedical industry and five belong to the food and beverage industry.
Behind the intensive surveys by overseas institutions is their sustained optimism about China's A-share market. As of December 18, the weekly net inflow of northbound funds reached 8.484 billion yuan, representing the seventh consecutive week of net inflow.
The trading through northbound funds has been active since the beginning of this year, with the turnover totaling 20.38 trillion yuan, an increase of 108.92 percent over the previous year.
There are multiple reasons behind this year's strong momentum of net inflow of northbound funds, including renminbi appreciation and the relatively lower equity valuation level at the beginning of this year, said Sun Yu, general manager of the securities research department of HSBC Qianhai Securities Limited.
-- Foreign enterprises upbeat about investment in Chinese assets
Foreign-funded institutions are optimistic about Chinese assets and will increase their allocation of funds in the Chinese market.
In September this year, HSBC Qianhai Securities conducted a survey targeting nearly 1,000 asset management institutions across the world, said Sun, adding that more than half of the surveyed institutions expressed their intention to increase their investment in Chinese stocks, especially A-shares in the coming 12 months.
Sun pointed out that overseas investors have shown more interest in Chinese stocks and bonds mainly due to China's well control of the COVID-19 pandemic, the rapid and effective resumption of work and production and the promising medium and long-term investment opportunities in China.
According to Goldman Sachs, in terms of the global market, 2021 may be the year with the highest absolute stock returns since 2017.
In the Asian market, Goldman Sachs maintains a higher allocation of investment in the A-share market and Hong Kong stock market and predicts a 16 percent growth of returns, of which the returns in the A-share market will be higher than that in the Hong Kong stock market due to renminbi appreciation.
Wang Ying, strategist at Morgan Stanley, said that the overall valuation of China's stock market can still maintain a slight premium relative to the overall emerging market, although China is expected to introduce a moderately tight credit policy in the second or third quarter of next year.
Besides, China's effective governance of balance of international payments and cross-border capital flows among the emerging markets will also bring down the overall risk premium of the Chinese market, Wang said.
Nicholas Yeo, head of China equities at Aberdeen Standard Investments, pointed out that the population above the moderately well-off level are expected to grow faster and the number of rich families will also rise more rapidly, which will be a very positive trend for the service industry. For his part, another major area is technology and energy, as the government will invest more in the high-tech and energy industries so as to ease the reliance on imports.
Data from China Central Depository & Clearing Co., Ltd. showed that overseas institutional investors has been increaseing their holdings of Chinese bonds for 24 months in a row by this November.
Freddy Wong, head of Asia-Pacific fixed income at Invesco, said that foreign investment is expected to remain strong in the coming year given the inclusion of Chinese government bonds in several global indices and the attractiveness of Chinese government bonds. (Edited by Yang Yifan with Xinhua Silk Road, yangyifan@xinhua.org)
A single purchase
