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Investors monitor stock price movements at a brokerage in Shanghai. Photo: AFP

Chinese onshore stocks outrank offshore securities traded in Hong Kong, New York as top choice for global funds, Invesco survey shows

  • Yuan-denominated shares are preferred to those traded in Hong Kong or New York, Invesco survey shows
  • Despite a slowdown, China’s GDP growth for 2021 and 2022 will outpace all advanced economies based on IMF forecasts
China’s onshore stocks remain a top option for global investors who see a resilient growth outlook in the world’s second biggest economy, according to a survey published by US money manager Invesco.

Some 52 per cent of them prefer yuan-denominated equities or so-called A shares to any other Chinese liquid asset class, the firm said. They rank ahead of onshore bonds, Hong Kong-listed shares and American depositary receipts issued by Chinese entities.

The survey commissioned by Invesco, covering senior managers at 200 asset managers in North America, Europe, Middle East and Asia-Pacific, was conducted over June and July. Invesco manages about US$1.5 trillion of assets globally.

“Despite the ongoing geopolitical tension and recent headlines on actions by Chinese regulators, the macro outlook remains strong,” said Chin Ping Chia, head of business strategy and development for China A investments at Invesco. “Global investors recognise the need and benefit of a long-term China allocation as the underlying economy continues to evolve and transform.”


Tightened regulations among key trends shaping China’s internet in 2021

Tightened regulations among key trends shaping China’s internet in 2021
Onshore stocks handed investors a 4.9 per cent loss this year in US dollar terms, using the CSI 300 Index of the nation’s biggest companies. The S&P 500 and Euro Stoxx gained 17.3 per cent and 11.4 per cent respectively, according to Bloomberg data.

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Despite concerns about a liquidity crisis sparked by China Evergrande and industry hiccups from a power shortage, China’s growth is still expected to outpace all major advanced economies. Gross domestic product is expected to increase 8.1 per cent in 2021 before easing to 5.7 per cent in 2022, according to the most recent IMF forecasts.

Central bank governor Yi Gang struck a bullish tone on the nation’s economy in an article this week, saying that China’s potential growth will be between 5 and 6 per cent annually and there is no need for massive stimulus, such as bond purchases.

About 86 per cent of the survey respondents have either increased or kept unchanged their allocations on China assets over the past 12 months, while 64 per cent planned to boost their bets in the coming year, Invesco said.

While Beijing’s regulatory crackdown on the technology sector is still ongoing, the investment themes of tech innovation and financial services are still the most popular among global investors, the survey concluded.

“China is already one of the most sophisticated digital economies globally and the country has by no means abandoned its ambition to further advance in this segment,” said Chia. Increased regulatory scrutiny will support a sustainable competition within the internet sector, he added.

This article appeared in the South China Morning Post print edition as: Yuan stocks ‘top choice for global funds’