Foreign investors expected to eye more China A shares – but pace set to ease: analyst
Foreign investors are expected to keep adding to their China A-share holdings, though the pace of buying is likely to slow from the surge in the first half of the year, according to a UBS analyst. “We still expect net inflows in the second half, but the pace will be somewhat slower than in the first half,” said Meng Lei, China equity strategist at UBS Securities, at UBS’s annual China A-share…
UBS analyst Meng Lei predicts foreign investors will continue adding to their China A-share holdings, though buying will slow from the first half surge. Net inflows are still anticipated in the second half, but the pace will be slower than the first half, according to Meng at UBS’s annual China A-share strategy conference in Shenzhen.
Foreign appetite for A shares hit a record in the first half, with overseas holdings reaching over 4.4 trillion yuan by the second quarter – the highest level on record. Global fund managers expanded positions, with holdings under the qualified foreign institutional investor scheme surging 87% in June, valued at 272.8 billion yuan.
The tech narrative and A shares' self-sufficient industrial chain attract global investors. However, macroeconomic headwinds are tempering foreign capital inflows, with tech shares pulling back in the third quarter and rising US Treasury yields weighing on sentiment. Despite these pressures, Meng expects net inflows to persist, citing China's push for technological self-sufficiency as a key structural support.
The yuan's strength and Chinese exporters' global prominence are also major draws, though a rotation into consumer stocks is not yet underway and would require signs of rising wages and a stable real estate market.
Written by urgent.news from SCMP Tech's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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