Recent data from Bank of America indicates a significant influx of $155 billion into global emerging market equity funds, marking the second-highest in history. Notably, China saw a record $139 billion inflow during the period, positioning it as a major attraction for foreign investors. This year alone, China's stock market has attracted $114 billion, while India has seen $21.3 billion inflow, and Brazil has experienced an outflow of $3 billion.
Strategists highlight China's relative advantage over other major global markets, suggesting it could continue to draw foreign capital, particularly as other markets are viewed as overvalued. There has been a consistent net inflow into Hong Kong stocks for three months, primarily driven by passive funds. A shift towards active foreign investment in the Hong Kong market could further enhance its valuation.
Top-tier foreign institutions are increasingly focusing on semiconductor investment opportunities. Since the third quarter, entities such as Temasek, Sequoia Capital, BlackRock, Goldman Sachs, and Morgan Stanley have shown significant interest in China's A-share market, especially in the semiconductor sector.
Goldman Sachs has upgraded its outlook on China’s stock market to "overweight", indicating potential for further growth. The target for the MSCI China index has been increased from 66 to 84, and for the CSI 300 index from 4000 to 4600. They also upgraded sectors like insurance, finance, internet, entertainment, tech hardware, semiconductors, retail, and consumer services to "overweight" due to improving capital market activities and asset performance.
