The recent bullish performance of the tech-heavy ChiNext in Shenzhen has come amid international investors' increasing interest in A-share companies, especially the smaller-cap technology companies, experts said on Monday.
The ChiNext closed 2 percent higher on Monday, the seventh consecutive trading day it has risen. However, the benchmark Shanghai Composite Index slid marginally.
According to Shanghai-based market tracker Wind Info, foreign institutions have researched ChiNext-listed companies 575 times since the beginning of April. They have also researched companies trading on the Shanghai bourse's STAR Market 641 times. During the same period, companies listed on the A-share main board were researched 265 times.
The A-share market will be "a safe haven" for foreign investors when overseas markets are lackluster, said experts from Founder Securities. Given China's relaxed policy environment, the A-share indexes will continue to rise amid fluctuations, with technology and growth enterprises likely to act as the key drivers in the following months, they said.
Foreign financial institutions in the Chinese onshore market have been active in general. According to Wind Info, they researched A-share companies at least 2,437 times since April, nearly twice the level seen during the same period last year.
Among the Wall Street giants researching China's stocks, Morgan Stanley has been in the forefront, undertaking research 72 times since the beginning of the second quarter. UBS has carried out research nearly 60 times since April.
Top sovereign wealth funds such as the Government of Singapore Investment Corp have not lagged in this respect. GIC researched A-share companies 26 times in the second quarter, up from 16 research activities carried out in the same period last year. Canada Pension Plan Investment Board researched Chinese mainland stocks 12 times in the second quarter, up from 2 during the same period of 2021.
The A-share market's relatively stable performance in recent months that ducked the global downtrend or volatility has attracted a lot of investor attention, said analysts from GF Securities. The A-share market's improved performance is mainly due to the US Federal Reserve's monetary tightening and the bottoming out of China's market, they said.
Although domestic factors largely drive the A-share market, northbound capital－funds of overseas investors buying into A shares via the stock connect programs linking the Shanghai, Shenzhen and Hong Kong bourses－has also played an important role with sustained inflows since mid-May, said GF Securities analysts.
Experts from China International Capital Corp Ltd said China's economic policies are relatively relaxed at the moment, while other major economies have been tightening their grip on local markets. This divergence is largely due to the different phases that each economy is at in terms of their respective economic cycles.
While China is introducing more stabilizing policies, the concern over global economic growth has been intensifying in overseas markets. Under such circumstances, the Chinese stock market will likely prove more resilient than its overseas counterparts, they said.