Bron CGTN.
Global investors seek refuge in China as inflation roils other markets
Updated 20:28, 28-Jan-2022
CGTN
Foreign investors are piling into China at the start of 2022, seeing it as a haven from the inflation, growth and pandemic problems plaguing most other markets.
Despite seeing returns last year hurt by Beijing's regulatory moves, global fund managers are pumping money into mainland equities and bonds despite, betting China's stability pledges, monetary and fiscal easing and subdued inflation could shield them against volatility in other markets.
That's in stark contrast to conditions elsewhere. Major central banks are preparing to withdraw the excess stimulus measures of the past couple of years, and the Federal Reserve is hastening monetary tightening to tame runaway inflation, potentially undermining stock values and earnings.
For David Dali, head of portfolio strategy at Matthews Asia, China is the "single favorite country" in 2022 among the roughly 30 investible emerging equity markets.
"We believe Chinese valuations are some of the least risky and most attractive of all major markets," Dali said.
Fidelity International also sees China stocks as attractive from a global perspective.
"China's policy shift is very clear. And recent data offers signs that the economy has stabilized," Fidelity's Shanghai-based fund manager Zhou Wenqun said.
Evidence of that bullishness is in foreign net inflows into Chinese stocks via the Stock Connect scheme, which hit a record-high daily average of $413 million during the first three weeks of 2022, according to Morgan Stanley.
Flows were strong in 2021, with a record $67 billion invested through the Connect channel in onshore equities. But the mainland blue-chip index lost 5.2 percent, in contrast to a near 27 percent rise in the U.S. S&P 500 and double-digit gains in most European indices.
Foreign buying at the start of the year was concentrated in banking, materials and capital goods sectors, according to Morgan Stanley.
UBS Securities said both foreign investors and domestic mutual funds had allocated to what they deem are hot themes, such as new energy and manufacturing.
(With input from Reuters)