NET capital inflow into China’s A-share market through stock connects hit a record high in January, indicating that foreign investors are upping their involvement in the market this year.

In January, a net total of 60.69 billion yuan (US$8.97 billion) flowed into the A-share market through northbound trading under the connect mechanism between the mainland and Hong Kong bourses.

This marked the first time that the monthly net inflow topped 60 billion yuan since the mechanism debuted in 2014.

Foreign capital inflow accelerated further in February as of Wednesday, with the net inflow through the stock connects hitting 25.59 billion yuan in total, according to financial information provider eastmoney.com.

Foreign capital poured into the A-share market as global investors’ risk appetite lifted, following the United States Federal Reserve’s announcement that it would be patient in raising interest rates, and amid signs of lessening trade tensions, said Zhang Xia, chief strategy analyst at Shenzhen-based China Merchants Securities.

“Expectations of a recovery in China’s credit expansion figures for January, which indicate improved economic fundamentals, also raised foreign investors’ interest in Chinese stocks,” Zhang added.

“Looking ahead, we estimate the increasing presence of the A-share market in major global stock indexes will usher in foreign capital totaling about 450 billion yuan into the market this year.”

The stock indexes Zhang mentioned refer to those provided by MSCI, FTSE Russell and S&P Dow Jones Indices. Portfolios worth trillions of U.S. dollars worldwide track components of the indexes or are benchmarked to them. (China Daily)