Overseas investors are snatching up mainland Chinese stocks at a record pace in November, as a result of new support measures announced by mainland Chinese authorities and overall optimism that the mainland will strike a deal with the United States to resolve the ongoing trade war.
Chairman of the Asia Financial Risk Think Tank
Global fund managers have increased asset allocation to the mainland in both stocks and bonds especially in November. What are your views on the trend?
The spike in foreign interest in China’s financial assets has begun since last year. The trend is very apparent since the China A stock and the China bond market been included in the MSCI. Nowadays in the investment managing field, a lot of managers are following this passive investment strategy. It is inevitable that they need to increase their asset allocation to the China capital market. Most of these investors are medium to long term investors. So they really value those companies that can distribute high dividends, have a high quality of assets and are very stable. And of course they also want to seek some growth.
What are the main focus and concerns of global investors on the current trade tensions between the US and mainland China that are shaping the performance and prospect of the stock market?
Investment areas have been affected by international trade tensions. Both the US and mainland China need to agree they need to reduce trade barriers. China is more open and welcoming in global companies to invest in the nation. So hopefully the US will be more open for Chinese investment to boost up their economy as well.
Apart from financial terms, on the technology side, the US has come up with a list of items, including artificial intelligence that imposed restrictions on exports. This will have a large impact on trading partners and emerging countries which rely on US technology to drive innovation and develop new products.