Rise in Foreign Investors’ Holdings of Chinese Stocks Was Likely Modest, Fragile, Analysts Say

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The value of Chinese stocks held by foreign-owned asset management institutions amounted to $776.1 billion at the end of the third quarter. Photo: AI generated

While foreign holdings of Chinese stocks likely expanded in the third quarter, when Beijing made efforts to stimulate the economy, the expansion may have been modest and the prospect for further increases is unclear amid policy and geopolitical uncertainties, according to analysts.

The value of Chinese stocks held by foreign-owned asset management institutions amounted to $776.1 billion at the end of the third quarter, up 24.3% from a quarter earlier, according to a Nov. 25 report published by investment bank China International Capital Corp. Ltd. (CICC).

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Foreign holdings of Chinese stocks rose to $776.1 billion in Q3 2023, a 24.3% increase from the prior quarter, surpassing benchmarks like the Hang Seng Index and MSCI China Index.
Despite increased foreign holdings, concerns over policy and geopolitical tensions persist, with some signs of outflows and reduced investor confidence.
Industry shifts show foreign asset managers favoring automobiles and consumer services amid China's stimulus efforts, while reducing allocations in software, telecom, and utilities sectors.

AI generated, for reference only

Who’s Who

China International Capital Corp Ltd.: China International Capital Corp Ltd. (CICC) is an investment bank that has published a report indicating that foreign-owned asset management institutions held $776.1 billion in Chinese stocks at the end of the third quarter. This represents a 24.3% increase from the previous quarter, surpassing gains in the Hang Seng Index and MSCI China Index. However, the report highlights that the increase in foreign holdings may be limited amidst geopolitical and policy uncertainties.

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What Happened When

Early September 2024：: The level of shorting of Chinese stocks was at a certain level, which later returned to this level after the stimulus rally waned.

Late September 2024：: China introduced a stimulus package that lowered banks' reserve requirement ratio and mortgage interest rates and provided more financing for local governments' support of the real estate sector.

Third quarter of 2024：: Foreign holdings of Chinese stocks expanded modestly.

End of the third quarter of 2024：: The value of Chinese stocks held by foreign-owned asset management institutions amounted to $776.1 billion, up 24.3% from a quarter earlier.

AI generated, for reference only