Capital Inflow

Foreign capital inflow into China’s A-share market remains robust since the beginning of September after major global benchmarks announced widened inclusion of A-shares.

Net foreign capital inflow reached 45.9 billion yuan ($6.5 billion) since the beginning of September through stock connect schemes with the Shanghai and Shenzhen stock exchanges, according to a report released on September 20 by Economic Informationdaily .

The figure accounts for about 27 percent of foreign capital inflow since 2019, which stood at 167.4 billion yuan ($23.5 billion).

The influx came after global index provider MSCI raised the index weighting for Chinese A-shares from 10 percent to 15 percent, effective from August 27.

Another benchmark FTSE Russell strengthened the weighting in one of its indices from 5 percent to 15 percent, while the S&P Dow Jones Indices weighed 1,099 A-shares at 25 percent.

The two moves, which took effect on September 23, are expected to generate $5.1 billion worth of inflow into the A-shares, according to FTSE Russell estimates and analysis from Chinamerchantssecurities .

Analysts believe the A-shares are at the outset of a hot streak of foreign capital influx with more to follow as China further opens up its financial sector.

China’s forex regulator scraped two investment quota restrictions for foreign institutional investors in September to better facilitate participation in the financial markets.