Foreign capital inflows into China’s equity markets hit a record in 2021 with Kweichow Moutai and Contemporary Amperex among top stocks
- Net inflows of capital into equities listed in Shanghai and Shenzhen reached a record high close to 420 billion yuan: CICC report
- Foreign investors attracted by economy’s bounce back from pandemic, with flows into manufacturing at expense of tech amid crackdowns
Foreign capital flows into China’s equity markets reached a record high in 2021, as the country further opened its financial markets and as regulatory changes directed offshore investors to turn to stocks listed in the mainland.
Net inflows of northbound capital into equities listed in Shanghai and Shenzhen, the major bourses on the mainland, reached a record of 417.5 billion yuan (US$65.5 billion) as of December 23, China International Capital Corporation (CICC) said in a report on Wednesday.
The net volume of capital flows almost doubled from last year’s level, based on data from the investment bank.
The record-high inflows are a sign of that foreign capital remains very interested in assets in China, after the world’s second-largest economy bounced back from the impact of the pandemic and despite increased geopolitical tensions. Yet risks remain, with high valuations in several in-demand sectors and amid worries that tighter regulations could sap investor appetite, analysts say.
China’s resilient growth makes its assets among the most promising in the world, said CICC analyst Li Qiusuo in a written reply to questions from the South China Morning Post.
“As China’s growth is expected to rise further, and with overseas growth facing downward pressure, the relative attractiveness of Chinese assets will be elevated,” he said. A further deepening of China’s capital market reforms and the potential for Chinese equities to take up a greater proportion in global investor portfolios, are also buoying this trend, added Li.