The ongoing equity rally has caught the attention of retail and overseas investors, who are chasing better investment alternatives
The Switzerland-based investment director at GAM Investments expects a further uptick in stocks, which will be underpinned by domestic investors’ rotation out of fixed-income products, whose yields have fallen to record lows, and Beijing’s push for technological innovation.
“Globally, almost all major stock markets are trading at or near historical highs [and] Chinese equities – both A and H – have much room to catch up,” said Cortesi, referring to mainland traded A shares denominated in yuan and H shares listed in Hong Kong. Her firm oversees US$15.8 billion of assets.
There are clear signs of a dispersion from safe assets. M1 – a money-supply measure of China’s demand deposits that can be withdrawn from banks anytime – rose 5.6 per cent in July, the fastest pace in more than two years, according to central bank data. The acceleration suggests that more money was being positioned for investment after being converted from term deposits. The central bank’s data also showed that household savings decreased by 1.11 trillion yuan last month, while deposits at non-bank financial institutions, such as brokerages, insurance and trust firms, increased by 2.14 trillion yuan. The divergence implied that part of the savings was being channelled into either stocks or mutual funds.
