Foreign capital moves into yuan assets
Analysts urge patience, confidence in Chinese economy, A-share equities
Foreign capital and international financial institutions are expanding their investment in the China market following the release of better-than-expected first-quarter economic data and high-level opening-up in the financial sector.
Industry analysts said that the long-term investment value of yuan-denominated assets will be more outstanding, as the continuous economic rebound and stepped-up policies will provide a stable environment for overseas investment.
On Wednesday, global leading multinational bank Standard Chartered formally opened a branch in Hefei, East China’s Anhui Province, in a move to strengthen the company’s business in the Yangtze River Delta region.
“We will fully give play to the network advantage of Standard Chartered across the globe, especially markets along the Belt and Road Initiative, to actively support the global development of local companies [in Anhui] and help foreign enterprises set up businesses in the province,’’ said Zhang Xiaolei, head of Standard Chartered China. In the first quarter, foreign investors saw a net increase of $41.6 billion in their holdings of China’s domestic bonds, another signal that international financial institutions are actively investing in yuan-denominated assets, according to the State Administration of Foreign Exchange.
The stable inflow of foreign capital into China shows that the country remains a promising destination for foreign investment and top choice for establishing businesses, analysts said, noting that the continuous inflow of foreign capital injects vitality into the economy.
The investment value of the A-share market is increasingly remarkable, which, along with resilient economic fundamentals and support policies, offers long-term opportunities for investors, said Yang Delong, chief economist at Shenzhen-based First Seafront Fund.
Yang said the country’s monetary policy will remain relatively relaxed during the second quarter in order to maintain the GDP growth rate.
“In addition to interest rate and reserve requirement ratio cuts, effective measures should be taken to guide money flows into the real economy and help the development of companies that really need loans in order to stimulate demand,” he said.
Yang called for patience and confidence in the Chinese economy and A-share market, stressing that value investing will bring excess returns.
Despite temporary internal and external challenges and difficulties, the Chinese economy’s overall trend of steady, long-term growth will not change, and the country will cultivate advantages supporting its long-term growth on the basis of achieving economic prosperity in the short term, analysts said.