Bulls beat a path to China stock shop but foreigners dare not go in
China's latest measures and pledges to fix the weakest parts of its struggling economy, domestic investors are scooping up shares in a cheap stock market, while most foreign investors are hopeful but taking it slow.
Last week's sweeping measures to support the property sector, which authorities dubbed as historic, were the latest in a series of steps China has taken since February in a bid to boost consumption, funnel state money into priority sectors and underpin the stock market.
Share prices have rebounded from multi-year lows in February on signs of more official support. The benchmark Shanghai index has climbed more than 3% since reports of the property rescue surfaced on Thursday, taking its gains to a fifth in 3-1/2 months, though the rally stalled on Tuesday as investors awaited more details on how the funding would work. Hong Kong-listed Chinese shares are up nearly 38%.
Capital flow data shows that rally has primarily been driven by mainland investors returning to a market they abandoned during the pandemic years. Foreign money has been a trickle.
«To some extent, I think what's been announced isn't yet of a scale that is going to start putting a meaningful kind of tens of percentage points onto GDP,» said Sunil Krishnan, head of multi-asset funds at Aviva Investors in London. «So, for investors that's a challenge.»
Krishnan says his funds do not have any active positions in China but have exposure to commodities that will indirectly benefit if its property market recovers from a prolonged slump.
But
