Analysts from investment banks and securities companies predict that China’s capital market, driven by progressive policies and efforts to open up, will continue to attract foreign investment in the second half of this year.
Data from financial information provider Eastmoney.com reveals that the capital market showcased impressive performance in the first half of the year, with a cumulative net inflow of northbound funds amounting to 183.32 billion yuan (approximately 25.44 billion U.S. dollars), surpassing the approximately 71.8 billion yuan recorded during the same period last year.
Considering China’s positive economic outlook, the substantial growth potential of its capital market, and the country’s commitment to further opening up the market, analysts anticipate an increase in foreign investment during the second half of the year.
Investment bank Goldman Sachs predicts that China’s cyclical growth momentum will strengthen in the latter part of the year, expecting overseas funds to increase their investment in the Chinese stock market once investor sentiment improves with the introduction of favorable policies.
Currently, the proportion of Chinese stocks held by foreign funds remains relatively low, while foreign funds exhibit a higher risk appetite for exposure to China compared to historical averages, according to Goldman Sachs.
During the Lujiazui Forum in Shanghai, Yi Huiman, Chairman of the China Securities Regulatory Commission (CSRC), emphasized China’s commitment to the fundamental policy of opening up and the comprehensive opening up of markets, institutions, and products.
Fang Xinghai, Vice Chairman of the CSRC, stated that China will continue to expand the opening up of specific futures varieties and broaden the scope of the dollar-denominated Qualified Foreign Institutional Investor scheme (QFII) and its yuan-denominated counterpart, RQFII.
In the latest measures to further open up the capital market, China announced that eligible foreign financial institutions in free-trade zones will be allowed to provide similar services as domestic counterparts, as stated in a circular released by the State Council.
Foreign institutions have been increasing their presence in the Chinese market as ownership caps are gradually lifted in areas such as securities, futures, and funds. Earlier this year, the CSRC granted fund management company Schroders a public offering license.
Zeng Gang, Deputy Director of the National Finance and Development Laboratory, believes that once implemented, these measures will facilitate the business innovation and development of foreign financial institutions operating in China.