Recent data showed that foreign managers globally have been reshuffling their holdings to Chinese stocks in past months. The head of EPFR manifested that allocations to China would increase further as pandemic issues in the United States worsen.
The pandemic has triggered market dislocations that generated a finance trend in sending more capital to Chinese stocks. According to the head of flock tracking firm, EPFR Todd Willits during a phone interview allocations into the Chinese market have been deeply considered by most people. He also noted that investments to Chinese stocks would possibly increase further.
United States stocks dropped in March indicating its three-year lows. The allocation to Chinese stocks, on the other hand, affected more than 800 funds quarterly and reached two trillion USD in assets under management. The yield was said to be a 20 percent increase from values in 2019 and a 17 percent increase from 2013. The data showed listings of stocks in nine categories under holdings in China, Hong Kong, Singapore, and Taiwan.
Although US stocks recovered since April, Chinese stocks have held up relatively well. The Shanghai Composite was down by 5.2 percent, but the S&P 500 was down by 11.1 percent on an annual basis based on Tuesday's close.
The data also showed that China equity funds have experienced outflows in recent weeks. Many of its funds have generated sales to customer requests for cash and other redemptions. The discharges were labelled as temporary as funds invested across regions continue to maintain their allocations to China. This move would be at the expense of other markets and improve the chances of meeting overall investment return goals.
Average allocations to China for investment funds focused on global emerging market stocks was at 34 percent. China allocation for funds invested in Asian shares was at 38 percent.
The increase of investments in Chinese stocks remained unscathed as trade tensions between China and the US continue. At present, the US government has limited American investments in Chinese companies. Investor interest in Chinese equities remained high.
Last Friday, Kingsoft Cloud went public as the first Chinese company in the US since the Luckin Coffee and after the pandemic ravaged the global economy. These events delayed stock listings. Kingsoft Cloud, however, manifested a growth of 40 percent of its shares in three trading days since its listing. At present, it has a valuation of five billion USD.
Companies such as J.P Morgan, Credit Suisse, CICC, and UBS underwrote for the Kingsoft Cloud offering. It was spun off from its internet and software parent Kingsoft listed in Hong Kong.
