Photop/Google Finance

Since April, there has been a significant shift in global capital towards Chinese assets, coinciding with the ongoing adjustments in various overseas markets, including U.S., European, and Japanese stocks.

In the U.S. stock market, the Nasdaq Golden Dragon China Index has seen a robust rebound, recording a cumulative increase of 14.86% over ten trading days from April 22 to May 3. This marks the largest continuous two-week gain since January 2023. Notably, on May 2, the index surged by 6.01%, the largest single-day gain since late July of the previous year.

Indeed, since the beginning of this year, foreign investment in Chinese assets has been progressively increasing. A late April report by the International Institute of Finance (IIF) revealed that for the first time since June of last year, both the Chinese stock and bond markets received net inflows of foreign funds in March, amounting to $1.7 billion and $2.1 billion, respectively. The report also indicated that March saw the first simultaneous monthly inflows into both Chinese and non-Chinese emerging market stock and bond markets since September 2021.

The surge in Chinese assets is underpinned by the sustained improvement in the fundamentals of China’s economy. The International Monetary Fund (IMF), in its latest World Economic Outlook report, stated that due to the resilient growth of major economies like China, it has raised its global economic growth forecast for this year by 0.2 percentage points to 3.1%. The IMF expects China’s economic growth to reach 4.6% in 2024, which is an upward revision of 0.4 percentage points from its October 2023 forecast.

According to CCTV News, institutions such as the UK’s Economist Intelligence Unit anticipate a more solid foundation for China’s economy in 2024. Organizations like the Center for Strategic and International Studies in the United States believe that China’s exports of electric vehicle batteries, electronic products, and minerals are robust, with many industries leading in global competitiveness.

Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, recently stated on social media that paying attention to the Chinese market is crucial for understanding the world and diversifying investments. He intends to continue investing in China. He argues that concerns about the risks of investing in China are outweighed by the reasons to invest. “The key question is not whether I should invest in China, but how much I should invest there,” he said.

The significant return of foreign capital is closely related to the positive economic data from China. While net buying Chinese assets, the expectations of foreign institutions for Chinese assets are also undergoing a major shift. For foreign giants like UBS, Morgan Stanley, and Bridgewater, Chinese assets have now become a value depression in the global stock market, and international investors’ sentiment, risk, preference, and interest in the Chinese stock market are improving.