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Net capital inflows into the Shanghai stock market reached nine consecutive days last weekas offshore investors rode the Shanghai-Hong Kong stock connect channel to buy stocks ofcompanies whose businesses outperformed their share prices.
According to Shanghai Stock Exchange data, capital poured into shares of automakers,resource firms and consumption-driven companies.
Analysts believe net capital inflows into the Shanghai market may be a sign that investors aremore confident about the recovery of sectors that suffered due to economic restructuring andslowing growth.
Last week's buying lifted share prices and held out a positive outlook for their performance inthe near future.
Net capital inflows into the Shanghai market through the connect mechanism this month havereached 2.5 billion yuan ($381.5 million). Shares of pharmaceutical, healthcare and consumergoods companies were among the best performing ones, according to data of the SecuritiesJournal.
Shares of about 10 consumer electronics makers, rare-earth miners and processors rosemore than 2 percent in a single trading day as investors in Hong Kong sought to increasetheir holdings of Shanghai-listed shares.
Shares in television maker Sichuan Changhong surged the maximum 10 percent on Tuesday,while those in rare-earth provider Ningbo Yunsheng rose 5 percent. However, a research notefrom Huatai Securities cautioned retail investors against herd mentality as some smaller-capshares are expected to fluctuate wildly in coming days.
According to Shanghai Stock Exchange data, on average, more than 80 percent of the dailyquota for the stock connect between Shanghai and Hong Kong was left unused in the pasttwo weeks. Trading volume shrank in the Shanghai market with only 121 billion yuanrecorded on Wednesday, the lowest since Jan 7.
Average Shanghai-bound trading volume through the connect mechanism plunged 35 percentquarter-on-quarter to 3.4 billion yuan per trading day in the January-March quarter, accordingto Hong Kong stock exchange data.
Researchers said they hold a positive outlook for the A-share market for the second half ofthis year. For, trading may become more active as investors see opportunities in the shares ofcompanies with stable income and growth.
"On the one hand, the A-share market has slumped more than what the actual economicgrowth has suffered. On the other, many shares have been undervalued, and they are likelyto be re-valued. So, in the next half (of the year), they could rebound to reasonable levels thatmatch the companies' actual business income and profitability," said Qiao Shan, an analystwith Shanghai-based He Zhu Wealth Management Ltd.
Li Bin, chief strategist with Guosen Securities, said a good short-to-medium strategy would beto seek opportunities from those benefiting from the ongoing economic transformation, andmacro policy support measures.
(CHINA DAILY)
