CNR Beijing, June 27 (Reporter Tang Jing) Since June, overseas stock indexes have fallen sharply, but the A-share market has a unique outlook and has gone out of the independent market. In addition, foreign giants frequently increased their holdings of A shares. In June, the net purchase of northbound funds exceeded 60 billion yuan, hitting a new monthly high this year. Experts believe that the long-term investment value of Chinese assets is continuing to emerge.
Selling, recession and policy tightening have dominated overseas markets since May, making the sustained rebound in Chinese stocks unique. The Shanghai Composite has nearly outperformed major global stock indexes this month, data compiled by Bloomberg show. At the close of last week, the Shanghai Composite Index, the Shenzhen Component Index, and the ChiNext Index had four consecutive positive weekly gains, with the ChiNext Index hitting a new high for more than a year. On June 27, the three major A-share stock indexes opened higher and moved higher, rising more than 1% during the session. As of the close, the Shanghai Composite Index reported 3379 points, an increase of 0.88%; the Shenzhen Component Index reported 12825 points, an increase of 1.1%; the ChiNext Index reported 2830 points, an increase of 0.22%.
Why is the A-share market able to go out of the independent market this month? Xu Gao, chief economist of Bank of China Securities, analyzed: “Because the domestic and foreign economic cycles are still out of sync, the impact of the domestic epidemic is significantly weakening. On the other hand, the signal of a stable growth policy is very strong. There are relatively strong expectations for the economy, and foreign monetary policies are significantly tightening, especially the Federal Reserve, which leads to a big departure from the trend of A shares and overseas stock markets.”
Since June, the inflow of northbound funds has accelerated. As of June 26, the net purchases of northbound funds since June have exceeded 60 billion yuan, hitting a new monthly high this year. From an industry perspective, Northbound funds have focused on buying food and beverages, power equipment, medicine and biology and other industries. The net purchases of these industries in the past month have all exceeded 10 billion yuan.
In addition, Chinese ETFs (traded open-end index funds) owned by foreign institutions are also continuing to “absorb gold”. The latest data on the holdings of funds owned by Capital Group, JP Morgan Chase, Fidelity and other foreign giants shows that Chinese stocks have become an important and popular asset. In the context of the global sell-off, what is the driving force for foreign investors to continue to buy A shares? Zhu Chao, deputy director of research at Guotai Junan, analyzed: “First, following the entire valuation of A-shares itself has been adjusted in the first half of the year, relatively speaking, from the historical median, it is much cheaper. Second, the comparison of overseas assets Complex, including the largest hedge fund, Bridgewater began to short the European stock market, which means that everyone is worried regarding the economic downturn overseas, or whether there will be a new round of economic recession. In terms of economic fundamentals, its resilience is still better than most markets globally.”
Many institutions said that in the context of the continuous recovery of the domestic economy, the valuation of Chinese assets is more attractive than that of similar overseas companies. Zhu Chao believes that with the further recovery of the domestic economy, foreign capital is still expected to continue to flow into A shares in the second half of the year, and Chinese assets are still an important direction for foreign capital to allocate to emerging markets.Return to Sohu, see more
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