BEIJING, Oct. 19 (Xinhua) -- Northbound investors, which refer to overseas investors trading China's A-shares through the Stock Connect programs, contributed 52.21 billion yuan of net capital influx into China's A-share market in the first three quarters of this year, reported China Securities Journal on Wednesday.
They, always regarded as a group of investors highly sensitive to market trends, took the move out of the relatively strong attractiveness of Renminbi-denominated assets, held industry experts, saying that generally, RMB-denominated assets of high quality in China boast rareness for global portfolio investors and valuation of China stocks has relatively high cost-effectiveness.
By the end of the third quarter, northbound investors brought about 87.48 billion yuan net inflows for A-shares via the Shanghai-Hong Kong Stock Connect and 35.27 billion yuan net influx via the Shenzhen-Hong Kong Stock Connect.
Apart from March, July and September, their trading of A-shares all resulted in net monthly inflows into the A-share market this year, with June bearing witness to as hefty as 72.96 billion yuan of net influx.
By industries, northbound investors mainly added holdings of A-shares in electric equipment, banking, and public utilities sectors in the first three quarters. They also raised holdings of A-shares in transportation, basic chemicals, and coal industries.
Chen Li, chief economist with Chuancai Securities, attributed northbound capital's net inflows in general to the increasing relative attractiveness of A-share market as compared with overseas stock indexes despite the certain short-term risk spillover from volatile overseas markets since the beginning of this year.
Due to the tightening overseas liquidity environment, slowdown of global economic growth and other factors, European and U.S. stock markets suffered deep declines amid notable fluctuations in the first three quarters of this year.
By September 30, total market capitalization of A-shares held by northbound investors stood at 2.17 trillion yuan, with Kweichow Moutai (600519.SH), Contemporary Amperex Technology (300750.SZ) and Midea Group (000333.SZ) ranking as the top three heavyweight stocks.
Regardless of others, northbound investors increased their holdings of A-shares of Kweichow Moutai and Midea Group among the A-shares of 766 companies which they added holdings in the first three quarters.
In future, performance of A-share market and H-share market of China is believed by market players to be optimistic and shares with high return on equity and stocks of consumption sector, in particular, the white goods in necessary and discretionary consumption sectors, are worthy of close attention.
Zhang Chi, chief strategist with Kaiyuan Securities said that overseas investors adding holdings of RMB-denominated assets represents a potential long-term trend and in the following five years, stocks of manufacturing industry are likely to gain more favor of long-term capital in light of the sector's relatively high cash returns. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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