The effects of China’s re-opening aren’t waning just yet when it comes to investor activity. The month of March saw more inflows into Chinese equities — a total of $7.2 billion, according to the Institute of International Finance (IIF).
China has certainly had its fair share of challenges the past few years, including the Evergrande real estate crisis, stricter regulations on large tech companies, and a resurgence in COVID-19 cases, but the second largest economy is proving resilient.
The country’s re-opening is causing investors to re-open their wallets and add more capital to Chinese equities. March’s $7.2 billion total was $3.3 billion higher than the previous month, which means momentum has yet to dwindle.
“Foreign investors continued to increase their holdings of China’s yuan-denominated assets in March amid the continuous upbeat sentiment after the country reopened its border and refocused on economic recovery, according to a US-based research report,” a South China Morning Post article noted.
As central banks around the globe look to get inflation under control, China’s re-opening provides an extra catalyst . Government-mandated lockdowns during a resurgence in COVID cases put another strain on its economy, but as restrictions began to ease, investors saw the opportunity to capitalize on China.
“Chinese equities are still enjoying the boost of sentiment provided by the relaxation of restrictions earlier in the year and thus have gained US$30 billion in the first three months of this year,” the IIF noted in a report.
A Bullish Opportunity Times Three
Traders looking to pounce on the bullish vibes in Chinese equities can take a look at the Direxion Daily FTSE China Bull 3X ETF (YINN ). YINN specifically tracks the FTSE China 50 Index, which consists of the 50 largest and most liquid public Chinese companies currently trading on the Hong Kong Stock Exchange.
While traders can take advantage of the short-term gains, long-term investors can also look to China as well.
“Overseas investors will continue to add yuan portfolios. Supported by a steady economic recovery and growing value of yuan assets both as an investment and safe-haven asset, China’s securities market will keep its attraction to foreign investors over the long run,” China’s State Administration of Foreign Exchange said in an annual balance of payment report.
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