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The growing trend of foreign capital flowing into Chinese assets has become increasingly evident, particularly as the A-shares and Hong Kong stock markets have experienced recent surges.
On October 4, data from the Hong Kong Stock Exchange (HKEX) revealed that JPMorgan made a series of substantial purchases on September 27. The firm acquired significant stakes in several Chinese companies, including China Pacific Insurance (H-shares) for HK$2.67 billion, BYD (H-shares) for HK$17.91 billion, Tsingtao Brewery (H-shares) for HK$2.42 billion, and HKEX shares for HK$18.13 billion, resulting in a total investment of over HK$41 billion in a single day.
Additionally, on October 3, HKEX reported that JPMorgan boosted its stake in BYD by 6.52 million shares at an average price of HK$274.5244, increasing its holding from 4.85% to 5.45%. Similar moves were made with HKEX itself, where the bank bought 6.11 million shares at HK$296.48, lifting its stake from 5.93% to 6.42%.
China Pacific Insurance saw a comparable increase, with JPMorgan purchasing around 10.14 million shares at an average price of HK$26.25, raising its stake from 6.98% to 7.35%. Tsingtao Brewery was another recipient of increased investment, with the bank acquiring 4.38 million shares at an average price of HK$55.42, bringing its holdings up to 8.27%.
Further illustrating this trend, on October 2, JPMorgan disclosed that it had purchased 39.86 million H-shares of China Ping An on September 26, at an average price of HK$44.43, amounting to a total of HK$17.71 billion, raising its stake to 8.28%. Moreover, on September 25, JPMorgan boosted its position in China Merchants Bank by acquiring 24.84 million H-shares, spending about HK$8.95 billion and increasing its stake to 6.52%.
JPMorgan, one of the largest financial institutions in the U.S., manages both its own investments and funds for foreign clients. A report from Securities Times underlined JPMorgan’s optimistic view on A-shares, attributing the market's rebound to reduced short-selling, increased margin financing, and growing investor enthusiasm.
An important indicator of this enthusiasm has been the surge in new retail accounts, with JPMorgan also forecasting a net inflow of RMB 59.3 billion into A-share ETFs from September 23 to 27. The firm suggests the sustainability of the A-share rally will hinge on fiscal policy, macroeconomic performance, and earnings revisions.
Some analysts point out that capital flows, previously diverted from China to Japan and Southeast Asia, are now reversing. BNP Paribas noted that over $200 billion was pulled from Japanese equities in September's first three weeks, with markets in South Korea, Indonesia, Malaysia, and Thailand also experiencing net outflows recently. A BNP strategist indicated that foreign investors are trimming their overweight positions in Japan and gradually reallocating funds back to Chinese assets, although the trend is still emerging. Meanwhile, the Bombay Stock Exchange reported that foreign investors sold off $1.8 billion in Indian equities on October 3, adding to a total of over $3 billion in the last three trading days. Factors such as rising oil prices, subdued stock derivatives trading in India, and China’s economic stimulus measures are driving this shift in investor behavior.
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