Global investor exposure to Chinese assets soars to US$800 billion


Although the relationship between Beijing and the international community has deteriorated, the global holdings of Chinese stocks and bonds have soared by about 40% to more than US$800 billion in the past year as investors purchased assets at a record rate.

Despite the tension between Beijing and Washington over issues from China, global investors are still pouring into the Chinese market. Company audit Beijing’s suppression of Xinjiang Uyghurs Marked genocide.

This also coincides with Beijing’s repression China listed on the U.S. capital marketIncluding the data security investigation of the ride-hailing group Didi Chuxing, the company announced the news a few days after it went public for $4.4 billion in New York.

According to the results calculated by the Financial Times based on Bloomberg data, so far this year, foreign investors have purchased a net US$35.3 billion worth of Chinese stocks through trading platforms that connect Hong Kong and Shanghai and Shenzhen exchanges. This is about 49% higher than a year ago.

According to data from Crédit Agricole, so far this year, foreign investors have also purchased more than 75 billion US dollars of Chinese government bonds, an increase of 50% over the same period last year.

Compared with the same period in previous years, foreign purchases of Chinese stocks and government bonds have grown at the fastest rate in history.The country’s rapid rebound from the Covid-19 pandemic has sparked enthusiasm for Chinese assets, but people are worried about its Economic growth is slowing.

“Contrary to geopolitical rhetoric, from an asset management perspective, you cannot avoid the Chinese market,” said Andy Maynard, a trader at investment bank Huaxing Capital.

The capital flowing into the Chinese market has surged in recent years, partly because Include RMB assets In a global stock and bond index tracked by trillions of dollars in assets.

In March, FTSE Russell became the latest index provider to confirm the plan Including Chinese government debt In its global bond index, Nomura Securities predicts that this move will inject more than 130 billion U.S. dollars into China.

According to calculations by the Financial Times in the United Kingdom based on data from the Credit Agricole Bank of France and the Hong Kong Bond Connect program, this year’s bond inflow has brought the total foreign holdings to approximately 3.7 billion yuan ($578 billion). Channels for onshore investors to trade bonds issued in the Mainland.

As of Wednesday, foreign investors hold more than RMB 1.4 billion (USD 228 billion) of domestic stocks Market connection with Hong Kong, Excluding other foreign investment plans.

This has increased the amount of Chinese stocks and bonds held by overseas investors through these channels to approximately US$806 billion, up from approximately US$570 billion a year ago.

High value is no longer valued globally this year Technology stocks It is also beneficial to the Chinese mainland market. Analysts said that China’s onshore stocks provide better exposure to industries other than technology, such as industrial groups.

Gavekal Dragonomics analyst Thomas Gatley said: “As technology loses favor, people want other industries, and most of these industries are better represented on land.”

Analysts said that as Chinese stocks listed in the United States are facing the impact of the domestic market, the mainland stock market has also been favored by global investors. Regulatory crackdown.

The shares of Didi, a Chinese ride-hailing group listed in New York, Fall down Last week, Beijing conducted a cyber security investigation of the company.

In the debt market, Bank of Singapore Chief Economist Mansour Mohi-Uddin pointed out that compared with US government bonds, Chinese government bonds provide attractive returns.

“There is a significant difference between Chinese bond yields and U.S. Treasury yields,” he said, noting that the gap between the two is 1.5 percentage points.

The capital flowing into China’s bond market was also accompanied by a rebound in the renminbi. The renminbi reached Three-year high Exchange rate against the US dollar in May.

“We expect the interest rate differential will continue to support [renminbi],” Mohi-uddin said, this will help promote the inflow of funds into Chinese stocks and bonds in the second half of the year.

The decision of the People’s Bank of China to lower the reserve requirement ratio of banks last Friday further boosted the momentum of overseas purchases of Chinese bonds this week.

This move reduces the amount of reserve capital that banks must hold, is expected to release about 1 trillion yuan of liquidity and mark the end of months of liquidity. Tighten monetary policy in China.

But the RRR cut also sends a signal to the market that Beijing may be worried about slowing growth, even though Signs of rising inflation.

Patrick Wu, head of Asian emerging markets trading at Credit Agricole Bank, said that the interest rate cut has surprised many international bond investors, who have recently slowed their pace of buying renminbi bonds.

“People are quite bearish and underweight on Chinese bonds,” Wu said, adding that as the deposit reserve ratio decreases, the amount of offshore RMB bond purchases through Hong Kong has surged.

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