Source: Economic Information Daily
In May, the surplus of foreign exchange settlement and sales by banks reached 1.5 billion US dollars; as of June 22, the cumulative net inflow of northbound funds since June was 41.08 billion yuan... A number of data show that although the Federal Reserve continues to raise interest rates to global markets, especially emerging markets It has brought a tightening effect, but my country's cross-border capital flows are generally balanced and stable, and overseas investors have a strong driving force to invest in the domestic financial market.
An industry insider interviewed by a reporter from the Economic Information Daily said that the attractiveness of China's financial market and the return on RMB assets will be more determined by economic fundamentals. Under the background of China's outstanding economic resilience and the continuous opening of the financial market, RMB assets will be very important to the global Chinese market. Long-term investors remain attractive.
The overall balance of cross-border capital flows
On the whole, banks' foreign exchange settlement and sales and foreign-related receipts and payments maintained a surplus pattern. According to statistics released by the State Administration of Foreign Exchange on June 22, in terms of U.S. dollars, in May 2022, banks settled foreign exchange of USD 205 billion and sold foreign exchange of USD 203.5 billion, with a surplus of USD 1.5 billion in foreign exchange settlement and sales. Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, said that the net inflow of cross-border capital related to the real economy such as trade in goods and direct investment has maintained a relatively high level, and will continue to play a fundamental role in stabilizing cross-border capital flows.
In terms of cross-border securities investment, data from the Institute of International Finance showed that in April, China’s stock market and bond market had net inflows of US$1.019 billion and US$12.371 billion respectively. slowed to $1.99 billion. As of June 13, the net inflow of foreign capital into the stock market had reached US$4.168 billion in the month, and foreign investors have a strong willingness to increase their positions in the Chinese stock market. Wind data also shows that as of June 22, the cumulative net inflow of northbound funds since June was 41.080 billion yuan. In the 15 trading days so far, 11 trading days were net purchases.
Liu Hui, senior fund manager of Invesco Investment, said that from the perspective of valuation, the valuation level of China's stock market is at a historically low level, and it is also at a low level compared with overseas markets. Under the influence of a prudent monetary policy and a proactive fiscal policy, the Chinese economy will achieve a good recovery in the second half of the year, thereby supporting the performance of the stock market. With the stabilization and rebound of A-shares, the net inflow of foreign capital into A-shares has increased significantly compared with the first quarter.
According to Cheng Shi, Chief Economist of ICBC International, from historical experience, foreign capital inflows into the bond market are more sensitive to the Sino-US interest rate gap. Therefore, the Fed raised interest rates by 50 basis points in May and 75 basis points in June. Against the backdro of tightening, net inflows into the bond market slowed down. The inflow of foreign capital in the stock market is more related to the fundamentals of China's economy. Even in the past Fed tightening cycle, if the fundamentals are resilient, foreign capital will still buy Chinese stock assets on a net basis. At present, the signs of China's economic market bottoming out and stabilizing are basically /confirm/ied, and it is expected that the subsequent cross-border capital flows in China will be moderate.
Long-term attractiveness of RMB assets
Behind the "vote of confidence" by overseas investors in China's financial market, it highlights that the long-term attractiveness of renminbi assets is growing.
Wang Youxin, a researcher at the Bank of China Research Institute, said that in the short term, the world is currently in a new round of monetary policy tightening cycle, liquidity tends to be tightened as a whole, inflation is high, and supply chain bottlenecks are prominent. Against this background, short-term fluctuations in the financial market Sex is greater. He believes that from a purely investment strategy perspective, it is a reasonable investment strategy choice to appropriately take conservative operations and reduce the allocation of financial assets with high volatility. However, in the long run, the impact of monetary policy will gradually subside, and the attractiveness of China's financial market and the return on RMB assets will be more determined by economic fundamentals. Taking into account factors such as China's economic growth rate still leading the world and a stable monetary policy, the real rate of return on RMB assets is still positive.
Data shows that in recent years, the allocation of RMB assets by foreign central banks and related funds tracking international indexes has increased significantly, but overall, overseas investors are still underweight RMB assets. "Whether from the perspective of RMB's 2.79% in global foreign exchange reserves, or from the 3% to 5% of foreign capital in the domestic stock market and bond market, there is still much room for foreign investors to further increase their holdings of RMB assets. There is room for improvement." Wang Chunying said earlier.
Liu Linan, head of macro strategy for Deutsche Bank Greater China, also said that in the short term, RMB assets are expected to highlight the unique allocation value in the US dollar interest rate hike cycle. In addition, RMB assets are still attractive to global medium and long-term investors due to their diversified characteristics and medium- and long-term appreciation potential. For some investors with medium and long-term allocation needs, it is a window opportunity to allocate RMB assets.
The market continues to open up and lay a solid foundation
Looking ahead, China's financial market will further open up and consolidate the foundation for attracting long-term capital inflows.
Recently, measures to promote financial market opening and interconnection have continued. The People's Bank of China, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange recently issued a joint announcement to coordinate and synchronously promote the opening of the inter-bank and exchange bond markets. According to the relevant announcement, the scope of foreign institutional investors admitted to the market has not changed, while the procedures have been further simplified, and the investment scope has also been extended to the exchange bond market. In addition, the China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission agreed in principle to include eligible exchange-traded funds (exchange-traded funds) (“ETFs”) in the interconnection between the two exchanges. The inclusion of ETFs as targets for interconnection means that the A-share market will usher in more "live water".
"In the next stage, we will work with various financial management departments to continue to unswervingly promote the reform and opening up of China's financial market, further simplify the procedures for foreign investors to enter the Chinese market, enrich the types of investable assets, improve data disclosure, and continue to improve The business environment, extending the trading hours of the inter-bank foreign exchange market, continuously improving the convenience of investing in the Chinese market, and creating a more favorable environment for foreign investors and international institutions to invest in the Chinese market." The People's Bank of China said previously.
It is worth noting that while the financial opening up, the risk prevention and control system will also be strengthened. Wang Youxin said that my country's cross-border capital flow macro-prudential policy tool system is constantly improving, and policy adjustments are timely and effective, which can effectively prevent abnormal fluctuations in cross-border capital and exchange rates, and it is expected that the overall risk will be controllable.
Cross-border capital flows are "stable", and the charm of RMB assets is "sufficient&q
Date:2022-06-23 Hits:123
