Foreign Investors Pour Billions into Chinese Equities, Sparking a Global Interest in China
Tensions between the US and China are at an unprecedented level (some 60,000 feet above ground level, to be exact). Despite this, when it comes to commerce unrelated to cutting-edge semiconductors, the Western world and China are engaging in cordial interaction.
The first six weeks of the year have witnessed the largest inflow of foreign investments into China ever. Meanwhile, Hesai Technology, a Shanghai-based car sensor developer, became the largest Chinese company to go public in the US in two years on Thursday.
Foreign investors are once again optimistic about China’s economy. President Xi Jinping has finally relaxed the stringent zero-Covid policies that had caused a brutal cycle of economically destructive lockdowns and reduced China’s GDP growth to just 3% last year, lower than the previous year.
Meanwhile, recent economic data released by the country has generated optimism among investors about the nation’s growth prospects, with manufacturing expanding for the first time in three months. This was enough for rating agency Fitch to increase its 2023 forecast for China by a full percentage point to 5%.
Consumer companies stand to benefit greatly as restrictions are lifted. Xiaolin Chen, the international head of investment management at KraneShares, thinks that the end of lockdowns could lead to a “V-shaped recovery” in the stock prices of China’s consumer brands in early 2023.
This could be a result of repressed demand, abundant savings, and an increase in real estate values. This shift has prompted a resurgence in worldwide interest in Chinese stocks, as evidenced by the CSI 300, China’s leading index for its largest firms, which has increased by more than 13% since October.
Additionally, foreign investors have poured a staggering $21 billion into Chinese equities this year, which is more than double the previous record from last year. Frank Benzimra, head of Asia equity strategy at Société Générale, states that this money has returned due to the market’s confidence that 2023 will be focused on growth.
As foreign investors pour into Shanghai and Shenzhen-listed companies through the Hong Kong Stock Connect program, exchange executives hope that Hesai Technology’s upcoming IPO on the Nasdaq stock exchange will revive Chinese listings on US exchanges.
The company, which supplies LiDAR laser sensors to autonomous car companies, saw a surge of up to 29% following its debut and closed up 11%. This suggests that business leaders see the talk of a Cold War as baseless.