Global investors snap up Chinese stocks for third month in a row, in more upbeat tone for US$9 trillion market
- Valuations in China’s markets are ‘worthy of allocations’, Everbright Securities analyst says
- Overseas buying is expected to carry on at least in the near future: Goldman Sachs
Foreign investors loaded up on Chinese stocks for a third straight month in April, adding to evidence that global fund managers have become more positive about the world’s second-largest market.
Overseas traders bought a total of 6.02 billion yuan (US$831 million) of yuan-traded shares through the cross-border Stock Connect programmes with Hong Kong, adding to net buying of 82.7 billion yuan during the previous two months, according to Bloomberg data. The three consecutive months of inflows are the longest streak of foreign buying in a year, the data shows.
Global money managers extended their purchases after China’s economy exhibited more signs of stabilising and regulators ramped up policy support to prop up stocks. Meanwhile, a rebalancing of global assets has also stoked demand for Chinese assets, which are trading at depressed valuations at a time when diminished expectations of an interest rate cut by the US Federal Reserve are roiling markets from the United States to Japan.
“China’s policy support and lower-than-expected US economic data have spurred inflows of foreign capital,” said Zhang Yusheng, an analyst at Everbright Securities in Shanghai. “The valuations in China’s markets are at a relatively low level and they are worthy of allocations.”
Foreign buying has been concentrated in consumer and financial stocks this year, the brokerage said without providing further details.