Foreign institutional investors further cut China positions in Q2 by average 1.8 ppt – UBS

 

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Foreign institutional investors further cut China positions in the second quarter of the year by an average of 1.8 ppt, versus 1.7 ppt cut in Q1 and 1.3 ppts cut in Q4 2022, UBS said in a note, adding that mutual funds’ holdings of Chinese companies remained higher than in Q2, 2022.

The sectors with the largest inflows of foreign capital were consumer services such as leisure, restaurants and education, while those with the largest outflows were natural gas utilities and auto parts, it said, adding that the largest inflows were from New Oriental, Zai Lab and BOC Aviation, while the largest outflows were from Kingdee International Software and Vinda International.

Sectors with the largest southbound inflows were communication services and energy, while financials and non-essential consumer goods saw the largest outflows. PetroChina and Pharmaron saw the largest southbound inflows, while XiabuXiabu and Sunac China saw the largest outflows, it said. 

While more concrete measures and details may be needed to further boost investor sentiment, UBS remained optimistic about the Chinese market given the modest valuation, low investor positions, pro-growth policy environment and solid corporate earnings growth.