Despite the repeated epidemic and other adverse factors, the inflow of foreign capital remained strong in 2021. According to the data, in 2021, the net inflow of northbound funds for 12 consecutive months, with a cumulative net inflow of about 432.2 billion yuan, setting a record annual net inflow. While the total volume has set a new record, the investment structure is more attractive, and the allocation of manufacturing industry has increased significantly, indicating that foreign capital pays great attention to and recognizes the high-quality development of China's real economy.
Experts said that with the continuous opening of China's capital market to the outside world and the steady recovery of macro economy, foreign investment will continue to actively embrace Chinese assets and share China's development achievements and opportunities in 2022.
basically oriented to attract foreign capital inflows
Looking back at the beginning of 2021, the overseas epidemic situation was repeated. Superimposed on the main international index companies, the company has basically completed the inclusion of a shares, and the incremental scale of passive funds has gradually decreased. The market generally holds a conservative attitude towards the scale of northward capital inflows into a shares. However, the subsequent statistical results show that the strength of northward capital inflows is completely beyond the expectation of the market.
Why did northward capital inflow hit a new high against the trend? Experts believe that this is mainly due to China's steady economic performance, the continuous improvement of policy environment and the continuous improvement of market ecology.
"China has taken the lead in controlling the epidemic situation in the world, taking the lead in economic recovery, continuously showing its development resilience and attracting foreign capital." Tian Lihui, Dean of the Institute of financial development of Nankai University, said. The latest data released by the National Bureau of statistics also confirmed this. In November 2021, the national economy continued to recover, industrial and agricultural production increased steadily, the employment situation was generally stable, and high-quality development was steadily promoted.
Li qiusuo, executive general manager of China International Capital Corporation Limited(601995) research department, said that under the impact of the epidemic, China's economic growth is more stable than other markets. China is still the main gathering place of global growth targets, and the valuation of leading companies is more attractive than internationally comparable companies.
In contrast, overseas, affected by the repeated epidemic and other factors, the economic and social problems of some countries are very serious. "In order to cope with the impact of the epidemic, some countries have implemented large-scale quantitative easing policies, resulting in asset value revaluation. International 'smart money\' needs to take the initiative to find a safe haven." Tian Lihui said.
A series of new two-way opening-up measures launched in China's capital market, including reducing the threshold for foreign investment access, promoting the facilitation and liberalization of cross-border investment, and enriching international financial products, have facilitated capital investment in the north. In addition, over the past year, the RMB exchange rate has shown an overall appreciation trend, coupled with the low valuation of a shares, attracting international capital to enter China's capital market.
"The high-level opening-up of the capital market has been carried out in an orderly manner, the reform of the registration system has taken a rapid and steady step, and the market ecology has continued to improve. Supported by multiple factors, the willingness of foreign capital to enter China's capital market has been increasing." Li Zhan, chief economist of China Merchants Fund Research Department, said.
optimistic about the development of China's manufacturing industry
On the whole, in 2021, the northbound capital will show the characteristics of increasing scale, active allocation and paying attention to the manufacturing industry. "The proportion of actively allocated funds in northbound funds has increased." Li Zhan said that in 2019, MSCI, FTSE Russell and S & P Dow Jones concentrated on or expanded the inclusion factors of a shares. Under this background, the northward capital inflow in that year exceeded 350 billion yuan.
In 2021, international index companies did not further improve the inclusion factor of a shares. "This means that the inflow of more than 400 billion yuan of foreign capital in 2021 is not the result of passive capital following the mechanical allocation of the index, but the active capital allocation of a shares, indicating that the allocation value and attraction of China's capital market are constantly improving." Li Zhan said.
Northbound capital has always been known as "smart money". Its allocation trend can not only show the judgment of foreign capital on the prospect of a certain industry, but also see through the changes of macroeconomic development. According to the data of China International Capital Corporation Limited(601995) , the current absolute position of foreign capital is still concentrated in consumer stocks, such as household appliances, leisure services, food and beverage and other industries. At the same time, the attention of northbound funds to China's manufacturing industry is increasing. In 2021, more than half of the net purchases of northbound funds will flow to the midstream manufacturing industry. Among the net purchases of more than 400 billion yuan, more than 100 billion yuan flowed into the electrical equipment industry, and the chemical and electronic industries also received net purchases of 56.7 billion yuan and 47.2 billion yuan respectively.
"China's manufacturing industry has unique competitive advantages such as\' large, long and complete \'industrial chain and engineers\' bonus. In 2021, China's manufacturing industry still maintained rapid development in the face of various challenges, and its competitiveness was gradually recognized, driving the increase of foreign capital's allocation to China's manufacturing industry." Li qiusuo said.
Li Zhan believes that the change of capital allocation industry in the North shows that the logic of foreign investment in China has quietly changed. In addition to the huge consumer market, China's advanced manufacturing industry and high-end manufacturing industry are increasingly recognized internationally, and its strength and voice in emerging fields such as carbon neutralization are also gradually improved. At the same time, the substantial inflow of funds from the north will also promote the further development of these industries and help promote the high-quality development of the real economy.
is expected to maintain a strong inflow trend
Looking forward to 2022, the market is generally optimistic about the inflow of northward funds.
"Foreign capital will continue to embrace Chinese assets." Li Zhan said that when the central economic work conference deployed the economic work in 2022, it proposed to continue to do a good job in the "six stabilities" and "six guarantees", continue to improve people's livelihood, strive to stabilize the macro-economic market and maintain the economic operation within a reasonable range. With the strong support of macro policies, China's economy is expected to continue its steady recovery trend in 2022, the fundamentals of enterprises will continue to improve, and the attraction to foreign capital will be further improved.
China International Capital Corporation Limited(601995) the research department believes that the risk of overseas supply chain in 2022 may bring pressure on RMB appreciation and promote foreign capital to allocate Chinese assets. At the same time, China's high economic growth, high manufacturing competitiveness and further opening of the capital market are expected to continue to attract foreign investment.
"Although it has experienced continuous inflow for many years, the current shareholding ratio of foreign capital in A-Shares is still low, China's economic growth is still resilient, the manufacturing advantage will remain for a long time, and the northward capital inflow will continue to expand." Tian Lihui said that at present, China's capital market has grown into an important global financial market. The total market value of A-Shares exceeds 90 trillion yuan, the number of listed companies exceeds 4000, and the large economic volume contains strong capital undertaking capacity.
In order to further attract overseas investors to enter the Chinese market and promote the greater development of the A-share market, in recent years, on the one hand, China has expanded the door of opening up and on the other hand, China has made great efforts to remove all kinds of obstacles to the entry of foreign capital. Not long ago, the CSRC publicly solicited opinions on Revising the provisions on the trading interconnection mechanism between the mainland and Hong Kong stock markets, and strictly supervised the so-called "fake foreign capital", so as to promote the market to be standardized and transparent and better facilitate real foreign investment.
More opening-up measures are brewing. Yi Huiman, chairman of China Securities Regulatory Commission, said publicly a few days ago that in accordance with the unified deployment of the country's new round of high-level opening to the outside world, it is studying and launching relevant measures to further expand the opening-up, including continuing to broaden the scope of the subject matter of the Shanghai Shenzhen Hong Kong stock connect, expanding and optimizing the Shanghai London Stock connect system, expanding the supply of international varieties of commodities and financial futures, and promoting the establishment of a qualification certification mechanism for overseas employees.
"As China's capital market continues to open to the outside world, the pace of capital entry from the north will continue to accelerate in the future, and the participation of foreign capital in China's capital market will be deeper and deeper." Tian Lihui suggested that while implementing a series of new opening-up measures as soon as possible, we should also pay attention to the relationship between overall opening-up and risk prevention. Relevant departments should strengthen research and judgment, improve the monitoring of cross-border capital flows, and prevent financial risks caused by large-scale foreign investment.
(source: Economic Daily)
