On April 12, the capital in the north direction of the A-share market returned rapidly, with a net inflow of 9.137 billion yuan throughout the day, a new high since April. Statistics show that since April, northbound funds have recovered a net inflow of 2.078 billion yuan. In addition, according to the Shanghai headquarters of the people's Bank of China, nine foreign institutional entities entered the inter-bank bond market in March, and a total of 1034 foreign institutional entities entered the market by the end of March.
Recently, the global capital market shock has intensified, and the trend of foreign investment in China's capital market has attracted much attention. Experts believe that in the medium and long term, the allocation of RMB assets by foreign capital has great room for improvement. Globally, RMB assets have strong attraction. At present, China is making efforts to keep its economy operating within a reasonable range. A new round of independent opening-up and pragmatic measures are brewing in the capital market. The dividends of economic development will continue to be released, and the attraction of RMB assets will continue to increase.
cross border securities investment current short-term fluctuation
In the stock market, the net outflow of funds from the north in March was 45.083 billion yuan, breaking the previous trend of net inflow for 17 consecutive months; In the bond market, according to the data released by the Shanghai headquarters of the people's Bank of China, as of the end of March, overseas institutions held 3.88 trillion yuan of inter-bank market bonds, a decrease of about 110 billion yuan compared with the end of February, the second consecutive month of decrease. Previously, the position data had increased for 10 consecutive months.
After a long-term increase in holdings, foreign investors suddenly reduced their holdings of RMB stocks and debt assets. Is this a short-term fluctuation or a trend change? In this regard, the person in charge of relevant departments of the safe said a few days ago that the short-term fluctuation of cross-border securities investment does not represent the reversal of the long-term trend of foreign investment in China's capital market.
Experts pointed out that securities assets have strong liquidity, and fluctuations at individual time points can not reflect the overall trend. Historically, the data of foreign investment in domestic stocks or bonds have fluctuated, but the long-term trend of additional allocation has not changed Haitong Securities Company Limited(600837) chief economist and chief strategist Xun Yugen said that from an annual perspective, since the opening of the Shanghai Hong Kong stock connect in 2014, the northbound funds have maintained a net inflow every year.
Experts pointed out that the recent increase in the volatility of cross-border securities investment is mainly due to the impact of the external environment, which is a normal phenomenon under the increased volatility of the international financial market. With the gradual weakening of the relevant impact, the behavior of foreign investment will return to normal.
"Goldman Sachs remains oversubscribed with a shares." Liu Jinjin, chief China equity strategist of Goldman Sachs, said in an exclusive interview with a reporter from China Securities Journal that with the gradual dissipation of the influence of "black swan" events such as the disturbance of geographical factors, overseas investors will still increase the proportion of A-share positions.
The person in charge of relevant departments of the safe stressed that at present, the fluctuation of cross-border funds under securities investment is within the normal and controllable range. Wang Chunying, deputy director of the State Administration of foreign exchange and spokesman, said recently that China's cross-border capital inflows generally rebounded in March, and the supply and demand of the foreign exchange market continued to be basically balanced, which may indicate that there are still stable inflows of cross-border funds related to the real economy such as trade and investment, which can hedge the impact of short-term fluctuations in cross-border securities investment.
RMB assets are attractive
Over the years, foreign capital has continued to increase its investment in RMB assets, which shows that RMB assets have a strong attraction to foreign investors. The fundamental reason lies in China's sustained economic growth and the continuous release of development dividends. Experts believe that the fundamentals of China's long-term economic improvement have not changed. Considering that the overall scale of foreign capital to RMB assets is still low, and the risk aversion attribute of RMB assets is gradually enhanced, RMB assets still have a strong attraction to foreign investors.
First of all, China's economy is resilient, and its long-term fundamentals will not change. Cheng Shi, chief economist of ICBC international, said that the key to observing the inflow and outflow of foreign capital still needs to return to economic fundamentals. Thanks to the endogenous resilience of China's economy, the volatility of foreign investment in and out of China's capital market is significantly lower than the overall level of emerging market countries. The head of the relevant department of the safe said that China's economy is resilient, its economic operation will remain within a reasonable range, the opening of the financial market will be steadily promoted, and the value of the RMB is basically stable, with good allocation value.
Secondly, there is still a lot of room for foreign capital to allocate RMB assets. According to Zhang Weidi, head of tactical asset allocation and investment manager of Morgan Stanley Investment Management, the current stock market value held by foreign investors accounts for less than 5% of the total market value of a shares, which is not small compared with other major markets in the world. In the medium and long term, there is still much room for improvement. According to Chang Zheng of Dongfang Jincheng research and development department, compared with the low interest rates of other major economies, the current RMB bonds have better cost performance.
In addition, the correlation between RMB assets and asset prices and returns of developed and emerging economies is low, which is a better choice for international portfolio to diversify risks. Wang Chunying previously said that RMB bonds have relatively independent asset return performance worldwide, which helps investors spread risks. "Under the complex and changeable market conditions, RMB bonds are conducive to international investors to reduce the volatility of their portfolio and optimize their comprehensive income, highlighting the significance of risk diversification of China's RMB bonds."
According to the data recently released by the International Monetary Fund (IMF), the proportion of RMB in global foreign exchange reserves further rose to 2.79% in the fourth quarter of 2021, which is also the highest level since the IMF began to publish the data on RMB reserve assets in 2016. This shows that the status of RMB as an official reserve currency is continuously consolidating, and RMB assets are recognized by more overseas sovereign investment institutions.
a new round of opening bonus is worth looking forward to
The continuous expansion of the opening-up of the financial industry is an important factor in promoting the trend of foreign investment in RMB assets. Looking ahead, China's financial market will steadily promote two-way opening-up, and the pace of high-level opening-up of the capital market will not change. For global investors, the opening dividend of the Chinese market is still worth looking forward to.
We should improve the one belt, one road and other interconnection mechanisms through the QFII and RQFII system, and seize the important opportunity of the "one belt and one way" initiative, and cooperate with various forms of overseas markets to actively participate in international financial governance. In recent years, the capital market has continued to deepen reform, and the market environment of "willing to come and stay" for long-term funds is gradually taking shape.
In the bond market, the two-way opening-up has been steadily promoted, and the recognition of Chinese bonds by international investors has continued to improve. So far, China's national debt has been included in the three major bond indexes in the world. "In the future, with the further steady development of the domestic bond market, the continuous enrichment of various bond products and the continuous integration of relevant legal systems with the international market, it is expected to attract more passive and active allocation funds." Wang Chunying said.
"We will study and launch a new round of independent opening-up and pragmatic measures, steadily expand the scope of the Shanghai Shenzhen Hong Kong stock connect, promote the expansion and optimization of the Shanghai London Stock connect mechanism, steadily expand the two-way opening of commodity and financial futures markets, enrich the supply of international varieties, and comprehensively enhance the institutional competitiveness of the capital market." Recently, Yi Huiman, chairman of the CSRC, reiterated that the pace of high-level opening of the capital market will not change, which will also help further boost the confidence of all parties in the market, including foreign capital, to actively participate.
