General

Against the backdrop of high inflation overseas and the tightening of monetary policies by European and American central banks, more and more overseas institutions have recently started to increase their positions in Chinese assets. BlackRock, Pictet Assets, Goldman Sachs and other large overseas asset management institutions have voiced their optimism about Chinese assets. Looking ahead, with the support of macroeconomic factors, Chinese assets may perform better than other global markets.

large-scale increase

In June, the actively managed ETFs of Capital Group, a well-known investment institution in the United States, increased their positions in most of the Chinese stocks in the United States, Chinese stocks in Hong Kong and A shares, and recently opened a position in Alibaba. Specifically, the International Focused Stock ETF (CGXU) has increased its positions in ENN Energy, WuXi Biologics, Kweichow Moutai, Huichuan Technology, and JD.com ADRs, and has also invested in Alibaba ADRs. The International Growth Stock ETF (CGGO) continued to hold Kweichow Moutai and increased its position in Ping An of China.

Capital Group is known for its active stock selection and long-term investment. The latest management scale is US$2.6 trillion. In February this year, Capital Group launched 6 actively managed ETFs, the International Focused Stock ETF and the International Growth Stock ETF to invest in global markets including the Chinese market.

Berkey, an ultra-long-term investment institution, also recently disclosed the latest US stock investment trends. Berkey's shareholding in Zai Lab increased significantly in the second quarter. As of June 30, Berkey held 46.9358 million shares of Zai Lab, which is the same as the end of the first quarter. Compared with the disclosed 1.982 million shares, an increase of 22.68 times.

In addition, ETFs that track Chinese assets are also favored by foreign investors. According to ETF.com data, the five major overseas Chinese ETFs have attracted a total of US$3.76 billion in the past month. Among them, Anshuo MSCI China ETF received a net inflow of US$333 million on June 30.

optimistic about the Chinese economy

Behind the continuous inflow of funds is the good expectations of foreign capital for China's economy. The record level of inflation has made overseas investors worried about the future economic trends of European and American economies. Against this background, the attractiveness of Chinese assets has become more prominent.

Gone are the days when the global economy and inflation remained stable for a long time, the BlackRock think tank said in a report. In the past three years, the world has faced labor shortages and high levels of debt. These factors are bringing the global macroeconomic environment into a more volatile period.

BlackRock think tank predicts that the measures taken by many central banks, represented by the Federal Reserve, to curb inflation may have a significant short-term impact on economic activity. As a result, BlackRock has reduced its overall portfolio risk appetite and maintained a more cautious approach.

Ben Powell, chief investment strategist for the Asia-Pacific region at BlackRock Think Tank, said that BlackRock is currently underweight stocks in the United States and Europe. "Compared with Europe and the United States, we prefer stocks in Asian markets such as China and Japan," said Pang Wenbo.

Against the backdrop of tightening overseas monetary policies, China's stable macroeconomic environment has become an important factor supporting foreign investment confidence. Luca Paolini, chief strategist at Pictet Asset Management, lowered his forecast for economic growth in the euro zone and upgraded Chinese stocks to overweight. "China's stock market has rebounded significantly recently, and liquidity is supportive. Chinese stock valuations are attractive," he said.

The Goldman Sachs portfolio strategy team recommends a high allocation of A shares and H shares. Goldman Sachs believes that Chinese stocks will lead the global market, supported by factors such as the macroeconomic environment.

Tech stocks are favored

After experiencing a continuous net outflow at the beginning of the year, there has been a significant net inflow of northbound funds recently. Wind data shows that in the past three months, northbound funds have bought a net 85.836 billion yuan. Technology stocks are favored by foreign investors, and sectors such as the Internet and automobiles have also become the focus of foreign investment.

"Recently, we have once again seen overseas investors increase their allocation of Chinese assets." Thomas Taw, head of investment strategy for BlackRock Anshuo Asia Pacific, said that overseas investors mainly focus on the MSCI China Index to deploy related Chinese assets, and funds tend to flow to tech stocks.

"Many overseas passive investors continue to enter the market and increase their positions in Chinese technology stocks. This situation may continue in the second half of the year." Thomas Taw said that overseas investors generally believe that Chinese technology stocks may have bottomed out, so many offshore investors Active investors are starting to refocus on Chinese tech stocks.

Goldman Sachs said that after a strong rebound and leading performance in the past three months, the price-earnings ratio of the Chinese stock market is close to the historical median level, and the equity risk premium is close to the long-term average. Risk-reward in Chinese equities is now more balanced than it was a few months ago. Superimposed valuation and position factors, continue to be optimistic about the Internet, automobiles, semiconductors and durable consumer goods sectors. In addition, we are optimistic about technology companies with stable profitability.