OPINIONS ListPage

By Yin Lei

Foreign investors kept piling up stakes in Chinese equities and bonds despite the volatilities in the three major A-share indexes and a weakening RMB, according to a report of the Shanghai Securities News on Monday.

After the close of the Friday trading last week, northbound investments via the two Stock Connect programs with Hong Kong registered a weekly net purchase of RMB 7.2 billion, the fifth consecutive week of net buying.

On a monthly basis, net inflows were seen from March to July, standing at RMB 9.7 billion, RMB 38.6 billion, RMB 50.8 billion, RMB 28.49 billion and RMB 28.47 billion respectively.

In July, the financial and cyclical stocks were the top targets of northbound investors, accounting for nearly 40 percent of their portfolios. Among their stakes above the 10 million-share mark, 13 belonged to banks and four were in non-banking financial entities. As of the end of July, these investors held a total of RMB 394.36 billion in financial stocks, an increase of RMB 30 billion in a single month, and kept buying steel, chemical, and real estate shares.

Chinese bonds remained the favorite targets for overseas institutions too, who had increased their holdings of these assets for the past 17 straight months up to July. From January to June, about 75 percent of China's newly issued Treasury bonds went to foreign institutional investors.

In the past month, they purchased RMB 58.22 billion of RMB bonds to push the total outstanding amount in their hands to RMB 1.354 trillion, according to a recent release by the China Central Depository & Clearing Co., Ltd.

In the overseas markets, the Chinese stocks and bonds also found favor. Offshore funds targeting Chinese bonds and stocks saw net cash inflows for 14 of the past 18 weeks and 17 of the past 20 weeks respectively. The mid-year reports of China's public companies revealed that as of August 5, the Qualified Foreign Institutional Investors (QFIIs) were among the major stakeholders in 17 A-share firms.