Chinese asset appeal rises; overseas Chinese stock ETFs up $10B+ since October.

Since October,Formal foreign exchange platform in 2022 the scale of ETFs focusing on Chinese assets in overseas markets has significantly increased, reflecting the growing confidence of international investors in the Chinese market. Data shows that as of now, the total scale of the top five U.S. China stock ETFs has reached $29.689 billion, an increase of about $10 billion since the end of September. In October, the net inflow of overseas China stock ETFs reached $15.16 billion, significantly higher than the total inflow in the first nine months of this year, indicating strong interest in Chinese assets.

Observers point out that behind this trend is the high recognition by foreign investors of China's economic fundamentals and growth potential. Since the beginning of this year, China has introduced a series of measures to stabilize growth, boosting market confidence and maintaining stable economic operations in a complex external environment. With the implementation of stimulus policies and enhanced support, international capital considers Chinese assets to be "undervalued" and possessing good medium to long-term investment return prospects. Due to relatively low prices and significant growth potential, Chinese stocks have greatly increased their appeal to global investors.

Goldman's latest report shows that in the four weeks ending October 30, global stock market inflows amounted to $63.628 billion, with the A-share market having a net inflow of $24.385 billion, a significant proportion. In its November 4 report, Goldman continued to maintain an "overweight" rating on A-shares and Hong Kong stocks, predicting a potential return rate of around 20% for the next 12 months. Goldman's analysis pointed out that in addition to favorable domestic policies, the Fed's rate-cutting cycle also provides additional support for the Chinese market, with expectations of a weaker dollar and a stronger yuan further attracting international capital into the Chinese market.

Domestic economists believe that with the continued influx of global capital, A-shares and Hong Kong stocks are expected to continue rising, driven by overseas investors. Furthermore, China's steady economic recovery and active policy support, particularly demand-related stimulus policies, will help hedge against external risks and drive continuous market growth. Analysts indicate that the increased presence of foreign capital will further bolster the attractiveness of the Chinese market, and the proportion of RMB assets in global allocation is also expected to continue rising.

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