Investors are putting billions of dollars more into U.S. stock funds than Chinese ones, according to data from fund research firm EPFR Global.
“The baton seems to be getting handed over,” said Cameron Brandt, director of research at EPFR, in an interview Friday. “A lot of investors think the short term play is the U.S., where the stimulus is ramping up, versus China, where there are signals a more prudent take will be taken, especially in the second half of the year.”
Interest in U.S., China funds jump
But in a global context, U.S. and China stock funds are the two regions that have attracted the most inflows from international investors over the past two quarters, Brandt said.
Net cumulative flows to U.S. stock funds since the beginning of 2020 were negative until November, according to EPFR data. The flows turned positive in the weeks following the U.S. presidential election, and reached $170 billion in the week ended April 7.
In contrast, Chinese stock funds saw net positive cumulative flows for much of last year that exceeded U.S. levels — until December. Net cumulative flows to Chinese stock funds as of the week ended April 7 were just $29.78 billion, according to EPFR.
The data company is a subsidiary of Informa Financial Intelligence and claims to tracks over 100,100 investment funds worldwide with more than $34 trillion in total assets.
It’s not over for China inflows
While U.S. stocks have climbed to fresh records this year, the Shanghai composite is little changed since December. Millions of new investors piled into the mainland stock market last year amid a surge in local stocks, stirring concerns of excessive speculation.
In the last several weeks, Chinese authorities have warned repeatedly of financial market risks.
Analysts have said Beijing’s 6% GDP growth target for the year and other economic indicators signal that rather than focusing on high-speed growth, policymakers are intent on cracking down on long-term problems such as high reliance on debt.
Still, he expects funds will continue buying Chinese assets given strong demand from retail investors since the middle of last year.
The Chinese government would also like to boost investor participation in the local stock market by making it easier for companies to go public, and encouraging foreign institutions to invest.
Reference: CNBC
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