YICAI｜Cabinet's Policy Boost Drives USD1.1 Billion of Foreign Funds Into Chinese Stock Market in a Single Day
(Yicai) April 16 -- Foreign investors poured a net CNY8.1 billion (USD1.1 billion) into China's stock market yesterday, the most for any day in the past month, after the cabinet released new policies to support a rebound in mainland-listed shares.
Overseas investors flocked to buy Chinese equities via the mainland's two stock connect programs with Hong Kong, with the Shanghai link logging a net inflow of CNY.3.9 billion and Shenzhen's CNY4.2 billion, according to figures from data firm Wind.
The main points of the State Council's new policies, issued after the market closed on April 12, include tighter listing rules, a clampdown on illegal share sales, more corporate dividend payments; stricter supervision of delistings, and encouraging the entry of medium-to-long term funds into the market.
Previous cabinet-led capital market reforms boosted stock prices, global investment banks wrote in recent reports. The first, in 2004, laid the foundation for a bull market from the second half of 2005 to 2007, while the second, 10 years later, prepared the policy groundwork for new market mechanisms, including the launch of the stock connects.
Foreign investors value China's efforts to reform its capital markets, particularly eased capital flows, a robust delisting mechanism, and enhanced market efficiency, such as lifting caps on daily trading limits, An Yun, chief investment officer at Schroders' Chinese mutual fund arm, told Yicai.
The unit of the London-based asset manager launched its first public fund on April 10, mainly to invest in mainland-listed stocks.
In recent years, overseas investors have taken note of the improvements in China's market governance, An said, adding that after a deep three-year correction, the market is expected to see a structural upswing this year.
"Market performance after March is stronger than expected, reflecting investors' anticipation of more positive factors coming into play," An said. Sentiment is picking up as the economy shows signs of bottoming out along with the emergence of new market hotspots such as artificial intelligence, he added.