Research shows big rise in foreign investment into Chinese equities

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Research shows big rise in foreign investment into Chinese equities

New research with 150 European institutional investors and wealth managers with a combined AuM of $292.8bn has highlighted the positive sentiment towards Chinese equities, a report published today claims. 

Three-quarters (75%) expect foreign investment into the asset class to increase in 1Q2021, compared to 4Q2020.  One-fifth expect it to remain the same.

The study was carried out by NTree International Ltd on behalf of investment manager China Post Global, which promotes a family of innovative exchange-traded funds (ETFs) providing access to commodities and emerging markets through its brand Market Access.  NTree, which has expertise in investor education and the distribution of ETFs, promotes Market Access ETFs in Europe.

Our research shows the positive sentiment towards Chinese equities this year."

However, there are some mixed views when it comes to the current valuation of Chinese equities.  Some 41% of investors said that they represent a fair valuation and 48% felt that they were slightly overvalued and 9% said that they were undervalued.

When looking at the wider market and the most attractive features of investing in Chinese asset classes, 42% said the positive returns from Chinese bonds when many other bonds around the world are providing negative yields were the most important, followed by 30% who said the ‘normal' economic, monetary, and fiscal policies in China compared to other global economies. 

Some 8% cited positive economic indicators in the market as most important, followed by strong capital growth in Chinese equities (7%) and the fact that the Chinese market has become more liquid (7%).

Timothy Harvey, CEO at NTree, comments: "Our research shows the positive sentiment towards Chinese equities this year which is being driven by favourable conditions in the market and the fact that China has sustained relatively normal economic and fiscal policies during the global coronavirus pandemic."

Danny Dolan, director at Market Access, commented: "Chinese equities have performed extremely well during the global pandemic, demonstrating again China's low correlation to other major markets. China's equity market has risen 30% over the past 12 months and continues to attract investment from overseas institutional investors."

Market Access ETFs combine intelligent index selection, optimal replication, transparency and liquidity. They are diversified investment solutions for investors across Europe, who use Market Access ETFs to implement their investment strategy in the commodity and emerging markets space.

Author spotlight

Christopher Copper-Ind

Christopher Copper-Ind is editor-in-chief of International Investment. Before this, he was editorial director of The Business Year, from 2014 to 2017.