GLOBAL investors are bullish on yuan-denominated assets as China’s economic growth momentum recovers and its financial markets further open up, financial professionals said on the sidelines of the 2023 Global Investor Conference in Shenzhen.

Global investors are optimistic about China’s long-term structural growth prospects, said Terry Pan, CEO for Greater China, Southeast Asia and South Korea at Invesco.

Foreign capital has continued to flow into China’s stock market this year, with a net influx of 170 billion yuan (US$24 billion) through stock connect programs in the first five months, according to Fang Xinghai, vice chairman of the China Securities Regulatory Commission.

Foreign investors’ holdings on the ChiNext board, China’s Nasdaq-style board of growth enterprises, surged more than 11 times over the past five years, Fang said.

The two-day event, which ended Friday, attracted over 300 institutional investors, financial intermediaries and representatives of listed companies from home and abroad.

China’s fundamentals are strong in the long run, and China has been contributing much to global growth, said Lyndon Chao, managing director at the Asia Securities Industry & Financial Markets Association.

Explaining the reasons for investing in yuan assets, Chao said low correlation with other risky assets can help achieve risk diversification while capturing upside potentials.

Besides diversification benefits, Janet Perumal, senior managing director at Wellington Management Hong Kong Ltd., noted that combined with valuation, scale and liquidity, investors can find good opportunities, especially in sectors such as technology, industrial, materials and health care.

Investors participating in the conference have also spoken highly of the sound capital market mechanism, effective protection for investors’ interests and stock listing appeal for quality enterprises.

China officially rolled out the across-the-board registration-based initial public offering (IPO) system earlier this year. The rules involve simplifying listing requirements, optimizing registration procedures and improving the regulations on underwriting and major asset restructuring of listed firms.

Of milestone significance in the reform of China’s capital market, the move will further strengthen global investors’ confidence, Perumal said.

With the registration-based IPO system, China’s A-share companies have increased to over 5,000 in number and their total capitalization is now more than 85 trillion yuan. Steadily growing markets of bonds, futures and derivatives provide global investors with diversified investment options.

Currently, China’s capital market is the second-largest in the world, with the largest and most active investor group, according to Fang.

China is also actively exploring ways to promote the two-way opening-up of its capital market at a higher level, and striving to create an enabling environment that can facilitate the market access of medium and long-term funds. (Xinhua)