Foreigners Scoop Up China Shares With January Inflow at Record

Foreigners are returning to China’s stock market with a vengeance, snapping up more shares in January alone than they did for the whole of 2022.

Offshore funds have added a net 141.2 billion yuan ($20.9 billion) worth of stocks listed in Shanghai and Shenzhen through trading links with Hong Kong this month, even with a week-long holiday trading break. That’s more than 50% above the previous monthly record, according to Bloomberg-compiled data going back to 2017.

The fervor has helped drive the CSI 300 Index, a benchmark for mainland stocks, to the brink of a bull market as traders returned from the Lunar New Year holiday this week. Analysts expect foreign buying to propel an outperformance in mainland shares in the coming months, a catch-up to the massive rally seen in overseas Chinese stocks since the start of November.

Solid holiday spending data will “continue to be a theme offering a shot in the arm throughout the first quarter and enhance investor confidence toward a recovery,” Kaiyuan Securities analyst Zhang Chi wrote in a note.

The buying streak continued into Tuesday, even as the CSI 300 fell 1.1%. The benchmark has risen 18% over the past three months as sentiment improved following Beijing’s Covid policy pivot and moves to support growth. While a world-beating feat by itself, the gains have still trailed the 49% surge in the Hang Seng China Enterprises Index, which tracks Chinese firms traded in Hong Kong.