Foreign investors remain confident in China’s capital market despite volatility: official

Investors check the A-share market at a securities brokerage in Jinhua, East China’s Zhejiang Province. Photo: VCG

Short-term fluctuations will not alter the positive long-term foundations of China’s capital market, and foreign investors remain confident in the long-term investment value of the A-share market, a senior official from the China Securities Regulatory Commission (CSRC) said on Tuesday.

Wang Jianjun, vice chairman of the CSRC, said that there have been no major changes in foreign capital flows and transactions recently. This year, long-term funds have maintained net inflows into the Chinese market, indicating that foreign investors are optimistic about the investment value of the A-share market, backed up by China’s continued economic growth.

Wang noted that the opening up of China’s capital market remains well paced, orderly and risk-controlled. The commission will expand the interconnection of domestic and foreign capital markets, broaden the range of the two stock connects, and enrich the supply of products for cross-border investment and risk management with sound investment rules.

Foreign capital recorded net inflows in January, February and April, with a net outflow in March, data from the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect showed.

Moreover, the CSRC will deepen cooperation with overseas regulatory authorities and strengthen communication with international investors, aiming to build a strong and predictable international environment facilitating the high-level opening-up of China’s capital market.

In addition to the volatility in global cross-border capital flows, China’s A-share market also has experienced greater fluctuations this year, and market confidence has been affected, mainly due to the Russian-Ukraine conflict, the US Fed’s interest rate hikes and the resurgence of the virus.

Wang said that the impact of various risk factors on the A-share market is manageable. The logistics network and industrial and supply chains have recovered in an orderly manner, and supporting policies for real estate and the platform-based economy have sent positive signals, which have been conducive to stabilizing market expectations.

Listed companies have accelerated the resumption of production, with an improved performance. A-share market valuations are generally lower than foreign markets, and the dividend yield of the CSI 300 index has reached 2.8 percent, equal to the 10-year bond yield.

The supportive signal from the country’s securities regulator will continue to inject confidence into China’s capital market. 

Chinese mainland-based stocks closed higher on Tuesday. The benchmark Shanghai Composite Index rose by 1.06 percent, while the Shenzhen Component Index went up 1.37 percent and the ChiNext Index closed 2.17 percent higher.

Global Times