Overseas investors increase their allocation to China's stock market——
International institutions cast a "vote of confidence" in the Chinese market
Recently, a number of international investment institutions, including Morgan Stanley and Goldman Sachs, have been "singing more" in the Chinese stock market, and many institutions have even used "real money" to increase their purchases of Chinese assets.
Experts said that with the implementation of a series of measures to stabilize growth in China and the accelerated optimization of epidemic prevention and control measures, the expectation of China's economic stabilization and rebound has become increasingly clear, attracting international institutions to re-examine the allocation value of Chinese assets.
In the future, under the background of China's deep promotion of high-level institutional opening-up of the capital market, the efforts of international institutions to "buy, buy, buy" are worth looking forward to.
Institutions raised expectations
Recently, a number of overseas investment institutions have increased their allocation to China's stock market.
On December 4, Morgan Stanley raised the Chinese stock market from "standard allocation" to "overweight allocation", and it is expected that the MSCI China index will rise by 14% by the end of 2023.
Wang Ying, Chief Equity Strategist at Morgan Stanley China, said that the evaluation framework shows that China's epidemic prevention and control measures have been continuously optimized, the real estate market has stabilized, and regulatory adjustments have entered the final stage. As a result, stock risk premiums may improve, thus raising the overall Chinese market. Target price, greater chance of valuation revaluation by 2023.
Coincidentally, on November 30, Goldman Sachs also stated that it also gave a "high allocation" recommendation for A-share investment in 2023, and it is expected that the valuation of A-shares will rebound significantly.
Liu Jinjin, chief China equity strategist at Goldman Sachs, said that under the expectation that the macro-control will be strengthened and GDP growth is expected to pick up, he is optimistic about the performance of Chinese stocks listed at home and abroad.
The Bank of America strategy team believes that due to the excess savings of Chinese residents and the continuous optimization of epidemic prevention policies, China's domestic stocks are bound to rise.
Ray Dalio, founder of Bridgewater Fund, believes that some extremely valuable assets can be found in the Chinese market. China is the second largest economy in the world. Investors can increase their investment diversification by investing in China.
The support of international organizations is not groundless.
Recently, overseas-listed Chinese ETFs, Chinese concept stocks, and the offshore RMB exchange rate have all ushered in a wave of solid gains, which has enhanced the confidence of foreign-funded institutions to invest in China.
For example, since November, the net value of the iShares MSCI China ETF with a scale of more than US$7 billion has risen by more than 30%; the Nasdaq Golden Dragon China Index has risen by more than 40% in November, marking the largest monthly increase since records began in 2003 The RMB exchange rate has also emerged from a strong upward trend recently. In the early trading on December 5, the offshore RMB exchange rate against the US dollar rose to 6.9813, a new high since mid-September.
"Currently some major economies continue to tighten monetary policies, the risk of economic recession has intensified, and market return expectations have weakened. In contrast, China's economic development is stable and investment logic is clear." Analysis by Li Zhan, Chief Economist of the Research Department of China Merchants Fund, China The economy is transforming from high-speed growth to high-quality development, and there are a lot of investment opportunities in the process of industrial upgrading and consumption upgrading in various industries.
At the same time, China has recovered quickly from the impact of the epidemic. The economy rebounded significantly in the third quarter, and its position in the global industrial chain is gradually rising.
In addition, China's financial opening-up continues to advance, and the channels for foreign capital to participate in the domestic financial market have been continuously optimized, attracting the attention of more and more international investors.
The attractiveness of A shares has increased
In addition to the high-profile "singing more" of Chinese assets, foreign investors have also used "real money" to continue to increase their positions in A-shares.
As of December 6, the net purchases of northbound funds in the past 30 days exceeded 75 billion yuan, and the net purchases in the past 10 days reached 42.8 billion yuan.
Looking forward to 2023, the market expects that the pace of foreign investment "buy, buy, buy" will continue to accelerate.
"Nearly 70% of the financing in the A-share market in 2022 will come from the Science and Technology Innovation Board and the Growth Enterprise Market, which fully reflects the support of the capital market for technological innovation companies and emerging industries." Sun Jin, partner of PwC China's comprehensive business services department, said In 2023, with the steady advancement of the comprehensive registration system reform and the introduction of more measures to support technological innovation, the international attractiveness of the A-share market will be further enhanced.
Specific to the investment industry, the Goldman Sachs strategy team believes that with the implementation of policies and measures to stabilize growth and the continuous optimization of epidemic prevention and control measures, in 2023 China's unemployment rate will decline, labor income will improve, and consumer confidence will be restored. The equipment and service sector will rebound strongly, especially the tourism, catering, entertainment, and aviation industries have a large room for recovery.
"Next, the geopolitical situation will enter a relatively calm stage, and the cost of equity and equity risk premium will gradually decline, which will help investors reinvest in China's stock market. The consumer sector is a beneficiary of economic opening, and we will further increase the The exposure of the sector, and continue to recommend an increase in the allocation of offshore Chinese stocks." Wang Ying said.
In order to better attract foreign capital to enter the Chinese market, Tian Lihui, dean of the Financial Development Research Institute of Nankai University, believes that it is necessary to persist in promoting the high-level institutional opening of the capital market and coordinate development and security.
It is necessary to continue to expand the interconnection quota, continuously increase the variety of international products, gradually relax the restrictions on the proportion of foreign capital in financial institutions, and continue to promote the internationalization of the RMB.
At the same time, the opening of the capital market must be opened to the outside world, there must be room for trading rules, and market supervision must be prudent in real time to prevent speculation by foreign hot money and the spread of foreign financial risks.
Fang Xinghai, vice chairman of the China Securities Regulatory Commission, also said recently that high-quality foreign capital market institutions are welcome to invest in China.
In the future, we will further improve the institutional framework for the opening up of the capital market, accelerate the implementation of various opening-up measures, and attract and gather more outstanding international institutions and talents to participate in China's capital market.
It will also continue to improve relevant institutional arrangements, further facilitate cross-border investment by domestic and foreign investors, and better support the development of cross-border financing for enterprises.
Competing to come to China to exhibit business
Since the beginning of this year, the policy dividends that have further improved the convenience of foreign investment in Chinese assets have been released intensively, providing "reassurance" for foreign-funded institutions to enter the Chinese market.
On April 26, the China Securities Regulatory Commission issued the "Opinions on Accelerating the High-quality Development of the Public Offering Fund Industry", proposing to support high-quality overseas financial institutions with long-term investment intentions in China's capital market to establish fund management companies or expand their shareholding ratio; November On the 18th, the People's Bank of China and the State Administration of Foreign Exchange jointly issued the "Regulations on the Fund Management of Foreign Institutional Investors Investing in China's Bond Market", improving and clarifying the fund management requirements for foreign institutional investors investing in China's bond market.
The convenience of foreign-funded institutions to do business in China has been continuously improved, and the scope of business and regulatory requirements have achieved national treatment.
At present, more than 10 foreign-controlled or wholly-owned securities fund futures companies such as JP Morgan Chase, Goldman Sachs, Nomura, and UBS have been approved one after another, and foreign banks such as Standard Chartered Bank have obtained fund custody qualifications in their Huazi branches.
Foreign private equity funds such as Bridgewater and BlackRock have successively established 38 wholly-owned subsidiaries.
On November 25, Neuberger Fund announced that it has obtained the public offering fund business license issued by the China Securities Regulatory Commission, becoming the second wholly foreign-owned fund management company newly established in China to carry out public offering fund business.
Neuberger Fund stated that the continuous opening of the financial market and the increasingly perfect legal business environment have further enhanced the confidence of Neuberger, and hope to integrate more deeply into the development of China's capital market in the future.
A number of foreign-funded institutions have started to set up business in China.
Goldman Sachs ICBC Wealth Management, which was approved to open in June this year, launched its first wealth management product "Phase 1 of Shengxin Junzhi Private Bank Exclusive Quantitative Equity Wealth Management Product" at the end of October, with a maximum fundraising scale of 5 billion units.
Goldman Sachs ICBC wealth management previously stated that after a deep correction in the early stage, the value of A shares is becoming more prominent, and there is a large profit margin for long-term holding.
As the first wholly foreign-owned public offering, since it was approved in June 2021, BlackRock Funds has issued three equity funds and one "fixed income +" fund, showing diversified products.
Lu Wenjie, investment director of BlackRock Fund, said that A-shares are a market with great breadth and depth, with a wide range of investment, many related target companies, and good liquidity.
As China continues to open up to the outside world, it is believed that the integration of the global market and the Chinese market will be a long-term trend.
"The entry of more international excellent institutions into the A-share market is a 'vote of confidence' in China's economic growth prospects and the profitability of Chinese enterprises. It can form healthy competition and interaction with domestic institutions, which is conducive to expanding the breadth and depth of my country's capital market. It is conducive to the continuous improvement of the service capabilities of related industries and helps my country's economic development." Tian Lihui said.
(Economic Daily reporter: Li Hualin)