A wave of foreign capital is revitalizing China's financial markets, marking a sharp reversal from earlier outflows as global investors regain confidence in the world's second-largest economy. Sustained inflows since June signal growing optimism about Chinese assets, with analysts predicting this trend could accelerate in coming months.
Morgan Stanley reports overseas investors poured funds into Chinese markets for two consecutive months through July, while Nomura Securities observed emerging market funds shifting allocations away from Indian equities toward China and South Korea. Hermitage Capital called the current uptick "just the beginning," citing attractive valuations and alignment with global equity rebounds.
"The combination of regulatory clarity and market accessibility makes China stand out in emerging markets," said a Hong Kong-based strategist familiar with cross-border investments. Improved transparency in tech sector regulations and Beijing's commitment to financial reforms appear to be easing previous investor concerns.
This renewed interest comes as China implements measures to deepen connectivity with global markets, including expanded stock connect programs and streamlined foreign access to bond markets. While geopolitical tensions remain a consideration, many institutional investors view current price levels as an entry point for long-term growth exposure.
