YICAI｜Foreign Investors Keep Increasing Their Chinese Yuan Asset Allocation in Shanghai in First Half
(Yicai) July 25 -- Overseas investors continued to expand their allocation of Chinese yuan assets in Shanghai in the first half of the year, with a particular interest in stocks, according to the Shanghai branch of China's central bank.
"Foreign investors increasing their yuan asset allocation highlights international capital's confidence in China's long-term economic stability and improvements," Wu Jinyou, deputy director of the Foreign Exchange Management Department of the People's Bank of China Shanghai Head Office, told the media at a press conference yesterday.
The increase in foreign investors' allocation of Chinese yuan assets in the first half was mainly because net foreign capital purchases of domestic bonds remained at a high level and foreign investment in domestic stocks rebounded to register a net inflow, compared with a net outflow a year earlier, with the buying intensity surging since May, Wu explained.
Shanghai's foreign-related economy remained active in the first half despite complex and changing external shocks, Wu noted. Of the city's USD2.77 trillion foreign-related economy, income fell 18 percent to USD1.32 trillion and expenditures rose 19 percent to USD1.45 trillion.
Shanghai's foreign-related receipts and payments showed three key features in the first half, which are a steady growth in trade receipts, a continued increase in the attractiveness of the capital market, and a rise in corporate foreign exchange hedging rates to 42.2 percent from 46.9 percent a year earlier, according to Wu.
With the opening-up of the market and the emergence of valuation advantages, the attractiveness of the Chinese stock markets to foreign capital is expected to keep strengthening, Wu predicted.
The PBOC Shanghai will continue to enhance the convenience of cross-border trade and investment, promote high-level opening-up and innovation, closely monitor the forex market, and ensure the overall stability of Shanghai's cross-border capital flow, he added.