2024.10.22

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Introduction: Driven by the rise in domestic stock markets, foreign capital's net purchases of domestic stocks have generally increased since the end of the month.

In recent times, the overall trend of foreign capital allocation in RMB assets has been positive. On a specific date, Li Hongyan, Deputy Director of the State Administration of Foreign Exchange, responded to a question from the First Financial Daily during a press conference held by the State Council Information Office. She stated that since the beginning of the year, the comprehensive yield of RMB bonds has remained favorable, attracting increased allocation by foreign investors. Additionally, driven by the rise in domestic stock markets, foreign net purchases of domestic stocks have generally increased since late April, further enhancing the willingness of foreign investors to allocate RMB assets.

As reported, as of now, the total amount of RMB bonds held by foreign investors exceeds billions of dollars, at a historical high. In terms of the stock structure, foreign central banks, commercial banks, and other conservative investors are the main holders, with a relatively high proportion of investments in long-term bonds such as government bonds and policy-oriented financial bonds, indicating strong investment stability.

China's stock market has shown a positive trend, attracting more foreign capital attention and allocation. Li Hongyan introduced that currently, the investment of foreign investors in the domestic capital market is still in its infancy, with the scale and proportion of RMB assets held not being high. The proportion of foreign capital in the domestic stock and bond markets is around %%, and supported by multiple favorable factors, there is still room for further improvement.

China's improvement in high-level openness has provided a favorable policy environment for foreign investors to allocate RMB assets. In recent years, the opening up of China's financial markets has been steadily advancing, offering foreign investors a series of investment channels, including the Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, Bond Connect, and direct access to the interbank bond market. These institutional arrangements have provided foreign investors with diversified investment channels.

Li Hongyan said, "As relevant policies further take effect, the appeal of the domestic capital market to foreign capital is expected to continue to strengthen."

Li Hongyan stated that RMB assets have a very good diversification effect for risk dispersion, providing excellent investment value. China has established a relatively comprehensive and deep financial market system, with the bond market and stock market currently ranking second globally in terms of size. The stability of the RMB's value and the diversity of assets offer relatively independent returns globally, which helps global investors diversify their asset allocation and mitigate risks.

At the same time, the proportion of the RMB in global cross-border transactions has been steadily increasing, its international influence is gradually strengthening, and it has become an important choice for global investors in diversifying their asset portfolios.

"Overall, foreign investment in RMB assets helps enrich the domestic market's participant base, enhances market liquidity, and promotes more active and international development of the domestic capital market. The State Administration of Foreign Exchange will continuously improve investment facilitation, create a favorable investment environment, advance high-level financial对外开放, and actively support foreign investors' participation in the domestic capital market," Li Hongyan emphasized.