Goldman Sachs: foreign investment surges as China adds US$3 trillion to the markets
China’s AI breakthroughs and de-escalation of geopolitical risks are behind a record foreign investor run on China’s onshore and offshore stock markets
Foreign interest in Chinese stocks rose across the board this year – propelling a rally that has added a combined US$3 trillion of market value to both the nation’s onshore and offshore equities – as advances in artificial intelligence bolstered the tech outlook and China-US tensions de-escalated, according to Goldman Sachs.
Global hedge fund inflows into China’s yuan-denominated A-share market recorded their strongest pace for several years in August, the US investment bank said in the report released on Thursday.
Overseas ownership through the qualified foreign institutional investor (QFII) programme – an investment scheme that requires government approvals for qualifications and quotas – rose to its highest levels in two years this year.
Foreign trading through the exchange link programme, a more popular access route to mainland stocks, increased to all-time highs, it said.
Hong Kong’s initial public offering (IPO) market was also on a tear, with foreign cornerstone investors surpassing previous highs set in 2021, the report said.
Some of the most notable deals included M&G’s US$60 million investment in the US$4 billion stock sale by Mixue Group in February and the involvement of UBS Group and Kuwait Investment Authority in the US$4.1 billion offering by Contemporary Amperex Technology in May.
The data sets “have painted a coherent picture that foreign investors’ participation in China equity, A shares in particular, has risen to cycle highs”, Goldman said.