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Foreign investors avoid entering the China stock market


Foreign investors avoid entering the China market

Local investors are eager to invest in a discounted stock market due to China's recent steps and commitments to improve its struggling economy.

Since February, China has been taking measures to boost consumer spending, allocate state funding to key industries, and bolster the stock market. Recently, officials implemented extensive measures to support the real estate sector. These actions were considered historic.

In February, share values fell to multi-year lows, but hints of increased official support have since lifted them. The Shanghai index has increased by more than 3% since news of the property rescue broke on Thursday, marking a sixth month of gains in three and a half. However, on Tuesday, the surge paused as investors sought further clarification on how the funds would be allocated. Chinese stocks listed in Hong Kong have gained about 38%. Mainland investors who had left the market during the epidemic years have been the key drivers of the rally, according to capital flow data. It has been a trickle of foreign money.

Sunil Krishnan, head of multi-asset funds at Aviva Investors in London, says that the announcements made so far are not big enough to significantly boost the GDP by tens of percentage points. He went on to say that this presents a problem for investors. According to Krishnan, even though his funds are not currently invested in China, they are still affected by commodities that will increase in value if the country's real estate industry improves after a long decline.

Aviva will need to change its view on China from negative to a more neutral position, as the country's policies seem to be achieving the necessary goals. China's central bank and provincial governments have announced plans to buy unsold properties and reduce mortgage rates. Beijing is committed to reviving the real estate sector, which used to be a significant contributor to the country's economy. This underscores the critical nature of current property initiatives.

The People's Bank of China promised to create a 300 billion yuan ($41.46 billion) loan facility for state-owned businesses to purchase unsold residences.

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