Foreign investors expected to eye more China A shares – but pace set to ease: analyst

Overseas capital in yuan-traded Chinese stocks faces cooling, as tech sentiment, US yields and yuan strength steer the next phase

“We still expect net inflows in the second half, but the pace will be somewhat slower than in the first half,” said Meng Lei, China equity strategist at UBS Securities, at UBS’s annual China A-share strategy conference in Shenzhen on Tuesday.

Foreign appetite for A shares – domestic shares of mainland companies denominated and traded in yuan – hit a record in the first half. Overseas holdings reached more than 4.4 trillion yuan (US$654 billion) by the second quarter, the highest level on record, according to Meng.

However, analysts said several macroeconomic headwinds were tempering foreign capital inflows into onshore bourses.