Chinese Investors Seek Better Returns Abroad Amid Local Market Struggles
Chinese investors are increasingly looking overseas for better returns as local markets falter
China, Hong Kong, Investors, MRF Funds, Stock Market, Bonds
Guangzhou: Chinese investors are on the hunt for better returns outside their local markets. With the recent struggles in domestic stocks, many are turning to overseas options.
It’s been a wild ride for investors in China lately. The local stock market had a brief rally, but it’s already losing steam. Meanwhile, bond yields are hitting record lows, making it tough to find good investment opportunities.
Recently, some funds that let mainland investors buy into Hong Kong markets had to stop new subscriptions because they were getting too popular. The demand is so high that even with increased purchase limits, they’re selling out quickly.
Li Changmin from Snowball Wealth mentioned that investing in Chinese stocks has been pretty painful for many. So, it makes sense that investors are looking for safer bets elsewhere, especially with the volatility in the stock market.
Funds like the JPMorgan Global Bond Fund are feeling the heat too. They had to pause new purchases from Chinese investors because they were nearing their limit. It’s a clear sign that people are eager to diversify their portfolios.
Exchange-traded funds (ETFs) that track US stocks are also seeing a surge in interest. For instance, the Invesco Great Wall S&P Consumer Select ETF has been on fire, even with a hefty premium for the underlying assets.
China’s stock market had a decent year last year, but it’s already down nearly 5% this year. Investors are worried about potential tariff hikes and what that could mean for economic growth, which is pushing them to look for better yields elsewhere.
The MRF scheme, which started in 2015, allows funds from mainland China and Hong Kong to market their products to each other. It’s been growing as more investors want to tap into global markets without dealing with currency conversions.
As of now, there are 44 funds in this scheme, and the amount of assets sold to mainland investors is just a small fraction of the total quota available. So, there’s still plenty of room for growth.
With all this market volatility, it’s no wonder that US bonds are looking more appealing to Chinese investors. They’re just trying to find a safe place for their money.
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