Foreigners Dive Back Into China Stocks, Buy Most Since December

(Bloomberg) -- Foreign investors are rekindling their interest in Chinese shares just days after selling the most on record, with fresh encouragement from strong corporate earnings and a rally rounding out the best quarter since 2014.

They net bought 11.1 billion yuan ($1.7 billion) of mainland-listed equities via exchange links with Hong Kong on Friday, data compiled by Bloomberg show. That’s the biggest single-day purchase since Dec. 3 and turned the tables on a month that was heading for net outflows: in the end there were 4.4 billion yuan of inflows in March.

The Shanghai Composite Index jumped 3.2 percent Friday, taking its world-beating rally this year to 24 percent, amid better-than-expected results from companies including Kweichow Moutai Co. The liquor giant, a favorite of overseas investors, rose 5.9 percent, its biggest gain since Dec. 3 also.

“Moutai earnings are strong, and that spurred the inflow today,” said Hao Hong, chief strategist at Bocom International Holdings Co. “Expectation of no rate hike in the U.S. this year also spurred fund flows into Chinese assets.”

Offshore investors have been net buyers of China’s A shares in all but two months since a second exchange link with Hong Kong opened in late 2016. They net bought a record average 4 billion yuan of A shares per day in February, before MSCI Inc. decided to boost the weight of Chinese stocks in its universe. Buying slowed in March as the Shanghai gauge zigzagged in a narrow range, testing investor confidence ahead of Friday’s final spurt.

To contact Bloomberg News staff for this story: Amanda Wang in Shanghai at twang234@bloomberg.net;Jeanny Yu in Hong Kong at jyu107@bloomberg.net;Amy Li in Shanghai at yli677@bloomberg.net

To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Will Davies, Ron Harui

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With assistance from Bloomberg