Chinese Stocks Surge in Popularity Among International Investors
Chinese stocks are witnessing a surge in interest from international investors, marking a significant shift from previous years. The $2.7 trillion rally in the onshore stock market today this year has drawn in funds despite their underweight positioning. This turnaround is driven by a combination of factors, including targeted government support, high household savings, and optimism in sectors like AI and technology.
The shift in sentiment is evident in the net buying of onshore equities and bonds by foreign investors in August. International wealth managers are returning to China, attracted by the stock market today rally and progress in high technology. This trend is further bolstered by China's strength in artificial intelligence and economic resilience against US sanctions.
Pimco reports that investors are now more fearful of missing opportunities in the Chinese stock market today than taking risks. This change in attitude is reflected in the increased activity of international hedge funds in onshore stocks in 2022, a stark contrast to 2021 when some clients deemed the market 'uninvestable'. The revaluation of Chinese assets, now driven by better fundamentals rather than political measures, is also boosting investor confidence. Joseph Zhang of Fidelity International has expanded his holdings in China due to growing investor interest in Chinese assets. Increasing risk appetite and a weaker dollar are further encouraging investors to look again at the vast Chinese stock market today.
The Chinese stock market, once shunned by international investors, is now experiencing a turning trend. Primarily state-driven entities, insurance companies, and investment funds are leading the charge, drawn by targeted government support, high household savings, and optimism in sectors like AI and technology. This shift in investor sentiment, coupled with a weakening dollar and increased risk appetite, signals a significant change in the global investment landscape.
