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Global funds return to China’s favourite F&B stocks, add more small-cap companies, brokerage says
- Foreign investors bought a combined 55.8 billion yuan (US$8.7 billion) of local stocks in May, the most for a single month this year
- F&B, banking stocks were top beneficiaries of inflows while allocations for electronics, home appliances and machinery makers fell
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Zhang Shidongin Shanghai
Global fund managers ploughed more money back into China’s so-called “stampede trades” while boosting their positions in small-cap stocks, buoyed by the yuan’s appreciation and ample global liquidity, according to Guosen Securities.
Stocks in the food and beverage sector, including popular bets like Kweichow Moutai and Wuliangye Yibin, took the lion’s share of fund inflows into onshore markets via the Stock Connect link, analysts led by Yan Xiang at the brokerage wrote in a June 4 report.
Overseas traders also piled into smaller companies trading on Shenzhen’s ChiNext board last month, they noted in the report.
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Foreign investors bought a combined 55.8 billion yuan (US$8.7 billion) of local stocks in total, the most for a single month this year, according to Bloomberg data. The buying spree culminated on May 25, when daily net inflows reached a record 21.7 billion yuan, helping lift the benchmark index to the highest level in three months.
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Baijiu, China's national spirit, seeking markets abroad where taste still fails to intoxicate
Baijiu, China's national spirit, seeking markets abroad where taste still fails to intoxicate
The purchases have pushed the market out of months-long rangebound trading following concerns about valuations and inflation risks pressured sentiment. The revival also came on the back of a powerful rally in the yuan, increasing the appeal of beaten-down market favourites.
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