At the start of 2022, foreign investors scrambled to enter the Chinese market, viewing the country as a safe haven from inflation, growth (anemic) and the Covid-19 pandemic that plagued most other markets.

Despite seeing 2021 earnings hurt by Beijing's regulatory overhaul, fund managers around the world are pouring money into mainland Chinese stock and bond markets as they see China's commitment to stability, gradually loosening monetary and fiscal policy, and low domestic inflation and other factors, which they are betting will shield it from other market volatility.

This is in stark contrast to other regions. Among the roughly 30 "investable" emerging stock markets in 2022, China is "the single most popular," according to David Daly, head of portfolio strategy at Mingkey International Investments. "We believe that China's (stock) valuation risk is the lowest and most attractive among all major markets," he cited the relative favorable factors in the Chinese market, including relatively low regulatory pressure this year, the government's efforts to stimulate the economy preparation etc.

Fidelity International also believes that the Chinese stock market is attractive from a global perspective. The policy shift in China is very clear. Recent data show that China's economy has stabilized. In Morgan Stanley's view, the net inflow of foreign capital into the Chinese mainland stock market through the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect is evidence of optimism about the Chinese market: the first three weeks of 2022 reached a record daily average of $413 million. flow.

Bond investors are also being drawn to China against the backdrop of increasingly divergent directions of monetary policy between the U.S. and China. Industry insiders say China's inflation problem is not as scary as in other countries, and Chinese bonds are also a good hedge.

Strong foreign inflows have helped the yuan hit a nearly four-year high against the dollar this week, even as China slashed some key interest rates to support economic growth. In contrast, the Institute of International Finance, a Washington-based think tank, said foreign capital flows to emerging markets outside China had "suddenly ground to a halt". Those emerging markets suffered $9.6 billion in foreign outflows last month, while inflows to China topped $10.1 billion. For emerging markets outside of China, "we believe the outlook is worsening due to the Omicron variant and the appreciation of the U.S. dollar and interest rates," the agency said in its latest capital inflow tracker. are rebounding faster than other emerging markets.”EditorXingWentao