Chinese financial institutions report net FDI inflows in Q2


Aug 6– Aug 10, 2018

China's financial institutions, including banks, insurers and securities firms, saw net investment inflows from overseas investors in the second quarter, the nation's foreign exchange regulator said Thursday. Foreign direct investment (FDI) in China's financial institutions came in at $3.47 billion in the April-June period, while $2.59 billion of investment flowed out, resulting in an $881 million net inflow, according to the State Administration of Foreign Exchange (SAFE). The country's financial institutions made a net overseas investment of $2.13 billion during the period. SAFE has been publishing data on a quarterly basis since 2012 to increase the transparency of foreign exchange statistics. China has rolled out a number of measures to significantly broaden market access since the beginning of 2018, the year that marks the 40th anniversary of the country's reform and opening-up policy.

Over 160,000 purchasers register for China's first import expo

More than 160,000 purchasers from over 80,000 domestic and foreign companies have registered for the first China International Import Expo (CIIE) as of Tuesday, its organizer said Wednesday. According to the China International Import Expo Bureau, it had planned to organize a total of 150,000 purchasers, but the registration exceeded expectations. The bureau also said over 40 companies from countries including the United States, France, Germany, and Japan have already signed up for the second CIIE in advance to secure exhibition booths. Shanghai is scheduled to host the first CIIE from Nov 5 to 10. Over 130 countries and regions and more than 2,800 companies have confirmed participation in the CIIE.

New pension target securities funds get the green light

China has just approved 14 Chinese asset managers to float pension target securities investment funds, a move to improve A-share market liquidity and offer the nation's middle-income earners more diversified pension management solutions. CSRC said qualified asset managers can launch two types of pension target funds, a target date fund and a target risk fund. The target date fund seeks to grow assets over a specified period of time for a targeted goal. The target risk fund is a type of asset allocation fund that holds a diversified mix of stocks, bonds and other investments to create a desired risk profile. "It's a piece of good news for the A-share market as the liquidity will be improved," said Hong Hao, chief strategist at BOCOM International Holdings Co. But Hong said although such fund-of-funds pension products are popular in mature markets like the United States, China should also carry out supportive policies that are now lacking, such as preferential tax treatment. Hao Yansu, director of the school of insurance at the Central University of Finance and Economics, agreed with Hong that the move will benefit the Chinese stock market in the mid- and long-term, but more supporting policies are needed for the global asset allocation of such funds. Hao said China's pension coverage is heavily reliant on State funding, and the burden should be shared between the government, employers and individuals.

Sector Overviews

Top-and bottom-5 performing CITIC securities sectors of this week


Indexes performance (as of Aug 10, 2018)


Market Outlook


YTD in 2018, China’s CPI has risen moderately with inflationary pressure in check over the short term. We expect CPI inflation rate to keep rising by a limited margin within the remainder of 2018 so that noticeable stagflation wouldn’t occur. Looking ahead, we reckon MoM PPI growth to go up but PPI is expected to dip by a limited magnitude as PPI remains on the downtrend on gradual rise of MoM PPI growth in 2017. On top of still solid cooperate profit, breakthroughs in structural deleveraging are expected to be made as compared with little development before then.  





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