The increase comes after China’s Central Bank provided more liquidity to the economy, reducing reserve requirements for banks.
Chinese stocks saw their largest inflow since 2015, and the second largest in history, as Chinese authorities ramp up stimulus measures to support the battered local financial market.
According to a Bank of America report published on Friday, to which Reuters had access, almost 12 billion dollars in Chinese stock funds in the previous week until January 24. Buying Chinese assets is currently “the most attractive contrarian long trade in the world,” noted Michael Hartnett, chief strategist of the research team that produced the report.
The data offered is a good sign for Chinese financial assets, in a context of slowing growth due to problems in the economy, persistent effects of the covid-19 pandemic and crisis in the real estate sector, the agency reports.
According to the figures cited, Chinese blue-chip stocks are currently trading near their lowest level in five years, while Hong Kong’s benchmark Hang Seng index is at its lowest level in more than a year.
Measures to stimulate the economy
The latest increase in allocations to Chinese stocks comes after China’s Central Bank provided more liquidity to the economy, reducing reserve requirements for banks.
In addition, Beijing announced measures to alleviate the liquidity crisis faced by real estate developers, by allocating 2 trillion yuan ($278 billion) to purchase their assets.
Against that backdrop, the Hang Seng is up almost 5% this week, its best performance since last July, and blue-chip Chinese stocks are up 1.5%.
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