Foreign investor sentiment to the Chinese market is at its most bullish level, largely due to improved access schemes, according to new findings from Standard Chartered.
The Standard Chartered RMB Investors Forum Survey, which surveyed 180 investors, custodians and regulators across Europe, Asia and North America, revealed 88% of respondents are now investing in China, up from 69% a year ago, and around three quarters of respondents plan to grow their China investments over 2018, up from 69% in 2017.
Positive sentiment to investing in China has largely been influenced by clearer and more flexible access schemes for foreign investors, such as Bond Connect and Stock Connect.
In addition, when considering future investments into China, almost half of respondents plan to use Stock Connect and 23% expect to use Bond Connect.
“The results of our survey show that China access is moving into a new era, one where concern over regulation, gives way to more practical considerations. The decision about whether to invest in China is no longer a question of if, but when,” said Margaret Harwood-Jones, global head, securities services, transaction banking, Standard Chartered.
As these investment channels continue to mature, investor priorities are now shifting away from the design of these mechanisms to more practical considerations such as funding and account operating.
Clarity on regulations remains one of the priority issues with 45% of respondents saying it is one of the most important investment factors. Furthermore, investors are also awaiting the introduction of delivery verses payment settlement on Bond Connect.
“The Connects still do not offer all the risk management tools investors require, such as the ability to hedge and delivery versus payment. These omissions continue to hamper take-up from jurisdictions with stricter regulatory oversight,” added Harwood-Jones.
“For this reason, access mechanisms such as the Qualified Foreign Institutional Investor (QFII) programme and the Renminbi Qualified Foreign Institutional Investor (RQFII) programme still have a role to play in investors’ China toolbox.”