From South China Morning Post: 2024-03-31 00:00:35

Foreign investors are showing increased interest in Chinese stocks, with overseas buyers boosting holdings in banks and food and beverage companies while decreasing exposure to computer-linked stocks, according to Sinolink Securities. Offshore hedge funds and foreign long-only funds are leading the inflows, driven by attractive valuations and light positioning in Chinese equities.

Stretched valuations in US, Europe, and Japan markets are making Chinese equities more appealing. The CSI 300 is valued at 13 times projected earnings, making it a more attractive investment option compared to other major indices. Chinese assets are seeing increased interest as part of a ‘barbell trade’ strategy adopted by overseas hedge funds.

Despite a slowdown in overseas buying in March, concerns about China’s economic recovery and corporate earnings linger among global fund managers. The January-February economic data showed a mixed picture, with industrial production and investment strengthening while retail sales remained subdued. China’s economic rebound is also hindered by a drag from the property sector.

Analysts expect more overseas buying of Chinese stocks as Japan scraps its negative interest rates, potentially redirecting fund flows in Asia towards China. Positive earnings news is now being rewarded by the market, leading to increased portfolio allocations to Chinese equities. HSBC remains optimistic on the outlook for Chinese stocks, urging investors to maintain overweight positions.



Read more at South China Morning Post: Overseas investors’ appetite for Chinese stocks continues to recover after second month of buying in March