In recent years, with the high-quality development of China's economy, the financial industry has focused on capital markets and asset management under the new development pattern. Relevant departments continue to expand effective investment and issue a series of documents to encourage foreign investment in high-tech industries and advanced manufacturing. Overall, the attractiveness of Chinese assets continues to grow, and the domestic market is showing strong resilience and investment opportunities.
Global funds have stepped up China's asset allocation
A series of data disclosed in May 2024 showed that global funds are increasing their allocation to Chinese assets. A number of institutions said that the continued volatility of overseas markets and the gradual improvement of China's economic fundamentals are the main reasons for attracting foreign investment to return. At the end of May, China's assets were collectively being sung by foreign investors, and A-share memory chips, semiconductors, medical care, communication services and other sectors were active. Goldman Sachs, a world-renowned investment bank, maintained an "overweight" rating on A-shares, and the target price of some leading companies has been raised several times. With the growth of the performance of domestic listed companies, international investors will have greater confidence in the A-share and Hong Kong stock markets in the future.
According to data released by the Ministry of Commerce of China a few days ago, from January to April this year, 16,805 foreign-invested enterprises were newly established in the country, a year-on-year increase of 19.2%, and the attractiveness of the Chinese market to foreign investment continued to increase. From the perspective of investment structure, foreign investment in China is constantly transforming and upgrading. From January to April 2024, the actual use of foreign investment in the mainland's manufacturing industry was 103.69 billion yuan, of which 45.73 billion yuan was invested in high-tech manufacturing, accounting for 2.8 and 2.7 percentage points of national investment respectively compared with the same period last year.
According to U.S. documents disclosed in May 2024, in the first quarter of this year, a number of asset management giants increased their positions in Chinese concept stocks. The chief strategist of a well-known fund said that positive signals have been seen from the three perspectives of economic fundamentals, policy and liquidity, and the net inflow of northbound funds is expected to continue in the medium term. Against the backdrop of rising volatility of overseas assets, A-shares and Hong Kong stocks, which have the characteristics of Chinese assets, valuation advantages, and global liquid assets, have been boosted by the "liquidity spillover" effect.
According to industry experts, Chinese assets are favored by asset management giants, mainly due to the improvement of China's fundamentals and policies. Since February this year, a series of new measures by the regulatory authorities have stabilized the confidence of domestic and foreign investors, including the regulator to release pressure on leveraged funds, and the State Council issued the third "National Nine Articles", proposing to strictly control the entry of issuance and listing, increase delisting efforts, and strengthen the supervision of cash dividends, all of which have stimulated the upward movement of the A-share market.
Foreign giants are optimistic about China and increase their weight in the Chinese market
According to the information disclosed on the official website of the Asset Management Association of China, the global private equity giants have officially completed the filing and registration and have begun to actively expand investment opportunities in the RMB market. A number of foreign private equity giants are unanimously optimistic about the Chinese market, believing that good investment opportunities continue to emerge. If only investing in US dollar assets is not conducive to business development in China, there will be some new practices in RMB asset allocation, such as foreign investment in China, establishing local teams in China, and focusing on S fund trading.
Industry investment experts said that at present, it is not only necessary to invest in high-quality US dollar and RMB assets, but also to face domestic RMB funds, through localized management, and use RMB funds to allocate assets in China. At present, it is an important stage of development of China's S market, and S fund trading is also a strategy for foreign private equity to enter the Chinese market.
At the beginning of 2024, the General Office of the Shanghai Municipal People's Government issued the "Measures on Further Promoting the High-quality Development of Shanghai's Equity Investment Industry", proposing to deepen the pilot of qualified foreign limited partners (QFLP). Promote the innovation of the QFLP pilot, expand the investment fields and investment methods, optimize the pilot application and change process, and facilitate the investment of sovereign wealth funds, pension funds, endowment funds, university funds and other institutional investors in real enterprises through the QFLP pilot. The above policies and measures will attract more investment institutions to settle in Shanghai for long-term development, and promote the joint development of Shanghai as an international financial center and a science and technology innovation center.
According to Baoli researchers, since the beginning of this year, foreign asset management giants have come to Shanghai. In February, AllianceBernstein, a wholly foreign-owned enterprise, is still in the process of filing and registration; In March, Brookfield, a subsidiary of Brookfield, a world-renowned wealth company, also completed its registration. In the same month, Kaide Private Equity Company, a subsidiary of KKR, a world-renowned financial group, completed the filing and registration.
According to a head of an Asian business, China, as the world's second largest economy, is also the largest private equity market in Asia. Their long-term confidence in capital market development and investment opportunities in the Asia-Pacific region will further facilitate the development of foreign investment in China.
The multiplication of opportunities in the Chinese market brings new development opportunities
Looking back at 2023, China's economic growth rate will remain leading among the world's major economies, and it is expected to contribute one-third to global economic growth throughout the year, remaining the largest engine of global growth. With the introduction of a series of policies to stabilize foreign investment and expand opening-up, China has continuously optimized the business environment and continuously stimulated market vitality, which has further strengthened the confidence of foreign-funded enterprises in the development of China.
In 2024, foreign investors will continue to be optimistic about A-shares, real money will pour into the Chinese market for investment, and a number of international investment banks have expressed positive views on the A-share market. Wind data shows that since the beginning of this year, the cumulative net inflow of northbound funds has been about 68 billion yuan, far exceeding the cumulative net inflow scale in 2023. A chief economist in the industry said that China's economic stabilization and rebound will further stimulate domestic economic growth, and foreign capital may continue to flow into the Chinese market. Foreign capital allocation still tends to be in the direction of large market capitalization, low valuation, and stable industry logic, which will make some domestic institutions adjust their strategies and follow the investment, thereby attracting more domestic investors to intervene.
The relevant person in charge of Michelin said that China's comprehensive protection of national treatment of foreign-invested enterprises, the introduction of trade and investment facilitation measures and the promotion of research and development incentive policies have created more market opportunities for foreign investors, and China's economic growth is still the bright spot of the global economy and will inject impetus into the regional and even global economic recovery. As China unswervingly expands its opening-up and promotes high-quality economic development, China's influence in the global industrial chain, supply chain and innovation chain will also increase significantly, providing opportunities for foreign-funded enterprises in China to continuously tap their market potential.
The Executive Vice President of Siemens said that China continues to relax foreign investment access, optimize foreign investment access rules, and actively promote industrial digitalization and green and low-carbon transformation, hoping to seize the opportunities brought by China's digital economy and promote the realization of the 'dual carbon' goal, and add momentum to the high-quality and sustainable development of China's economy."
Since 2024, China's economy has developed steadily and continues to be an important engine of global economic growth. As the world's second largest economy, China is an important support for global manufacturing and trade, and plays an important role in maintaining the stability of the global supply chain.
As a professional investment service company, Baoli Investment continues to focus on the track of science and technology innovation and promotes the development of new productivity with high-quality services.
Part of the data sources: People's Daily, Science and Technology Innovation Board Daily, Finance Associated Press