CHINA’S onshore stock market witnessed roughly 140 billion yuan (US$20.72 billion) in net foreign buying via the stock connect program in January, registering the biggest monthly inflows on record and surpassing total inflows in 2022.

Offshore funds added a net 139.5 billion yuan worth of stocks listed in Shanghai and Shenzhen through trading links with Hong Kong in January, even with a week-long Spring Festival holiday trading break.

The fervor has helped drive the CSI 300 Index, a benchmark for Chinese mainland stocks, to the brink of a bull market as traders returned from the Lunar New Year holiday this week.

Analysts expect foreign buying to propel an outperformance in mainland shares in the coming months, a catch-up to the massive rally seen in overseas Chinese stocks since the start of November.

Solid holiday spending data will “continue to be a theme offering a shot in the arm throughout the first quarter and enhance investor confidence toward a recovery,” Kaiyuan Securities analyst Zhang Chi wrote in a note.

The months-long rally has led to some investors booking in gains. However, few doubt that Chinese stocks will shine this year. There’s been a flurry of forecast upgrades for the nation’s economy, with Goldman Sachs Group Inc. seeing a 5.5% expansion, even as most developed economies grapple with the fear of a recession.

There’s still room for further purchases. Hedge fund investors have boosted holdings of Chinese stocks for three straight months but positioning hasn’t yet caught up with the improving investment, Goldman strategists wrote Jan. 29. (SD-Agencies)