Foreign businesses in China are increasing their investments and asset acquisitions in the country following the recent introduction of a series of expansionary fiscal, monetary and financial policies by the Chinese government.
Fang Dongming, head of China Global Markets at UBS, noted that recent proactive economic policy initiatives present an opportunity for foreign companies to increase their investments in China.
"Now there is an overall policy orientation of focusing on the economy. Focusing on China and increasing investment here, this is a trend. It is very important for us at UBS and our clients to seize this opportunity," he said.
Since late September, when China's central bank and the China Securities Regulatory Commission introduced a series of policies aimed at revitalizing the economy, investor activity has surged, with a 29 day streak of China's A-share market hitting more than one trillion yuan (about 138 billion in U.S. dollars) in daily volumes. In response to the longest such run since 2015, many foreign institutions have published research reports expressing optimism about Chinese markets.
"First we need to look at the growth potential, and second is the valuation and the relative demand for global portfolio diversification. Overseas investors have the need to invest in the Chinese stock markets," Fang said.
Fang's view is shared by Sun Yu, general manager of the securities research department at HSBC Qianhai Securities Limited. Sun and his team have received a surge of requests from overseas investors to survey sub-sectors related to new quality productive forces and provide professional investment advice and market analysis.
"We are conducting 20 to 30 company surveys per week. Compared to September, the frequency of our research has seen a significant increase, reflecting a notable improvement in investor sentiment, especially among global investors," Sun said.
From September 24 to November 8, the sample foreign funds tracked by Sun and his team saw a net inflow of over 10 billion U.S. dollars into the Chinese stock market.
"For Asian funds, their allocation to the Chinese market has basically returned to the highest level in the past five years," Sun said.
According to several foreign investors, as China's economic fundamentals continue to improve, long-term overseas capital waiting on the sidelines is expected to accelerate its flow into the Chinese market.
Foreign institutions increase investment as China's policies drive market optimism
