Recently, the overseas market has fluctuated, and the A-share market has gone out of the independent market and is favored by foreign investors.The Chinese economy continues to improve, further enhancing the attractiveness of Chinese assets.
Many mainstream foreign institutions, including Goldman Sachs, UBS, and Credit Suisse, have expressed their confidence in investing in the Chinese market, emphasizing that the Chinese market may become a global investor’s favorite under the background of the Fed’s accelerated tightening policy and the increasing pressure of overseas economic adjustment. "haven".The continuous release of dividends from the opening of China's capital market will keep RMB assets more attractive.
Contrary to the trend, attracting global attention
Data from a number of institutions show that since June, against the backdrop of emerging markets experiencing capital outflows as a whole, A-shares have gained many international investors to increase their positions against the trend.
The Institute of International Finance (IIF) said a few days ago that international investors bucked the trend and increased their holdings of A shares in June, in contrast to the situation in other emerging markets.The IIF estimates that the A-share market received US$9.1 billion in foreign capital inflows in June.According to a report released by Goldman Sachs a few days ago, the inflow of cross-border capital in the Chinese market has improved, with A-share northbound capital inflows of US$11 billion in June.
Data shows that after the net purchase of northbound funds last month was 72.96 billion yuan, reaching the third-highest level in history since the launch of interconnection, northbound funds still maintained a net inflow this month.
In the second quarter, the A-share market performed the best in Asia.According to statistics, the CSI 300 Index rose by more than 6% in the second quarter, while the Korea Composite Index fell by more than 15% and the Nikkei 225 Index fell by more than 5% during the same period.Among them, the CSI 300 Index rose by more than 9% in June, the largest monthly increase since August 2020."In June, the rise of A shares against the trend and the increase in foreign investment against the trend can be said to be mutual achievements and complement each other." An institutional market person said.
"The Chinese market is more resilient among emerging Asian markets," said Liu Mingdi, chief Asia and China equity strategist at JPMorgan Chase & Co. Entering the second half of 2022, the case for buying Chinese stocks has become more convincing.For example, China's current account shows a persistent surplus, there is more room for macro-control, and there is little pressure to tighten liquidity.
Independent trend shows charm
Behind the favor of Chinese assets from foreign investors is the continuous recovery of the Chinese economy, and the cost performance of Chinese assets is further highlighted.
"Currently, the 'steady' of the domestic economy is in sharp contrast with the 'crazy' of overseas inflation, which determines a big difference in macro policies. Therefore, the operation of domestic asset prices also shows independence and is not completely synchronized with the fluctuations of overseas financial markets. " said Wang Sheng, chief strategist at Shenwan Hongyuan Securities.
Some market participants pointed out that with the Fed and other major overseas central banks accelerating monetary tightening, the current focus of overseas financial markets is shifting from "inflation" to "recession". reflect.On the other hand, domestically, with the gradual implementation of a package of economic stabilization measures, China's economy has shown a sustained recovery and positive momentum, providing strong support for asset prices.
China's prudent monetary policy has maintained its support for economic growth even as overseas monetary policy has been tightened.Recently, Citibank strategists upgraded Chinese stocks to overweight, noting that Chinese assets currently have attractive valuations.
Emerging markets could suffer a sharper correction amid a possible U.S. recession, according to a Goldman Sachs research note updated this month.There are likely to be plenty of opportunities for Chinese stocks, driven by positive macroeconomic indicators.Chinese stocks will continue to be driven by domestic economic activity.
RMB assets will remain attractive
Looking forward to the future, many institutions believe that thanks to favorable policies and better fundamentals, RMB assets will continue to remain attractive, and foreign investment in A-shares is still the general trend.
The warm winds blowing frequently on the policy side have strengthened the confidence of institutions to invest in RMB assets.Credit Suisse believes that the recently launched package of economic stabilization measures has boosted investors' expectations for corporate earnings and stock investment returns, which is positive for the A-share market.
The outlook for economic growth is a key factor in whether the market can continue to strengthen and gain investors' favor.Hu Yifan, investment director and head of macroeconomics at UBS Wealth Management Asia Pacific, said that unlike other major economies that are facing increasing downward pressure on the economy, China's economic recovery in the second half of the year is a deterministic event.
In addition, a series of recent measures to deepen the reform and opening up of the capital market have also boosted the confidence of international investors to participate in the Chinese market and Chinese assets.Tang Xiaodong, head of BlackRock China, believes that the recent inclusion of stock ETFs into the interconnection mechanism has enriched the channels for cross-border investment and provided more diversified, more convenient means and more certainty for foreign capital to enter the Chinese market. environment of.Morgan Stanley recently stated that various institutional arrangements for introducing medium- and long-term investors, including the personal pension system, will have a long-term positive impact on the A-share market.
The reporter from China Securities Journal noticed that after JPMorgan Chase "turned more", international investment banks such as Goldman Sachs, Citigroup, UBS, Credit Suisse, Bank of America and other international investment banks have successively sang the Chinese stock market.
Based on the analysis of institutional viewpoints, foreign capital is expected to become one of the sources of incremental funds for the A-share market in the second half of the year.According to estimates by CITIC Securities, foreign capital is returning to a steady increase due to the recovery of the domestic economic fundamentals. With reference to the inflow rate in 2021, it is expected that the net inflow of foreign capital in the second half of the year is expected to reach about 200 billion yuan.
