Chinese equities in 2020 are expected to attract more than $40 billion from foreign investors, according to UBS, in the midst of the country’s ongoing market opening of its financial sector.
The projection by UBS for 300 billion yuan ($43.5 billion) in foreign inflows only accounts for actively managed money. The amount could be further bolstered by passive flows should global index providers like MSCI continue to increase the weighting of A-shares in their benchmarks. According to the bank’s strategist Wendy Liu, even the market could enjoy even more tailwinds from the ongoing liberalization including the removal of foreign ownership limits.
«The further opening up of the securities industry, such as letting foreign investors set up their wholly-owned mutual fund houses and brokerages, will also facilitate a foreign fund influx,» Liu explained. «Overall, we are optimistic about the market outlook.»
Following an impressive 22.3 percent gain for A-shares in 2019, the bank expects another 6 percent climb in 2020 driven by new inflows and Beijing’s efforts to slash borrowing costs which is estimated to boost earnings per share of China’s 300 largest listed firms by 10 percent.
