BUSINESS Chinese mainland shares set new record in net overseas purchases as economy revives

BUSINESS

Chinese mainland shares set new record in net overseas purchases as economy revives

Global Times

07:26, February 01, 2023

The Chinese mainland equity market set a new record on Tuesday, with daily net purchases of A-shares via the northbound trading link system exceeding 10 billion yuan ($1.48 billion) for the fifth time in a single month.

Investors monitor stocks at a trading center in Chengdu, Southwest China's Sichuan Province. (Photo: VCG)

The rising passion among overseas investors for buying Chinese mainland shares came amid a conspicuous uptrend in economic activity.

Net purchases of mainland shares via the northbound legs of stock link-ups between mainland and Hong Kong hit 10.14 billion yuan on Tuesday, according to financial data provider Wind. This marked the fifth day in January that reading exceeded 10 billion yuan, a new milestone for enthusiastic overseas investors.

Over the past 16 trading days in January, a shortened month factoring in the weeklong Spring Festival holidays, overseas investors increased holdings of mainland shares by 141.2 billion yuan, a new monthly record.

The flagship Shanghai Composite Index edged down 0.42 percent on Tuesday, finishing the month up 5.39 percent.

The Shenzhen Component Index gained 8.94 percent for January while the tech-heavy ChiNext index rallied 9.97 percent in January.

That A-shares started the year on a high note matched a marked rebound in the world's second largest economy as the country's optimized response to COVID-19 rebooted the economy and reignited investor interest.

"The latest economic data suggest that a V-shaped recovery is in store for China in the second quarter," said Sean Taylor, Asia-Pacific chief investment strategist at asset manager DWS, in a research note sent to the Global Times.

China's economic growth at 2.9 percent for the fourth quarter of 2022 was above market expectations. For 2023, growth was expected to pick up to 5 percent, according to Taylor.

In a fresh sign, the official manufacturing purchasing managers' index (PMI) rose to 50.1 in January from the previous month's 47, while the non-manufacturing PMI rebounded more robustly to 54.4 in January from 41.6 in December, data from the National Bureau of Statistics showed Tuesday.

That suggests substantial upturns in both manufacturing and the services sector. A reading above 50 signals expansion while a reading below 50 points to contraction.

As regards an improvement in stock markets, Taylor reckoned that "there is still some room for further price gains."

The Chinese equity market has left behind the long downward spiral that began in February 2021, and only a small part of the losses has so far been recovered, he said.

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