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 strategy conference in Shenzhen on Tuesday.
Foreign appetite for A shares – domestic shares of mainland companies denominated and traded in yuan – hit a record in the first half. Overseas holdings reached more than 4.4 trillion yuan (US$654 billion) by the second quarter, the highest level on record, according to Meng.
Global fund managers aggressively expanded positions, with holdings under qualified foreign institutional investor scheme surging 87 per cent in value to 272.8 billion yuan by the end of June as buyers piled into companies tied to the artificial intelligence supply chain and green energy, according to financial data provider Wind.
The tech narrative and A shares’ unique, self-sufficient industrial chain are very attractive to global investors
However, analysts said several macroeconomic headwinds were tempering foreign capital inflows into onshore bourses.