(Bloomberg) -- China’s stock market is starting to sizzle again, and that’s drawing in foreign investors.
The Shanghai Composite Index has climbed 3.3% this week, poised for its best performance since June, while the small-cap ChiNext gauge is on the brink of a bull market. Overseas investors pumped a net 26.8 billion yuan ($3.8 billion) into the nation’s domestic stock market via exchange links this week, the most since February.
Turnover has also been recovering. The value of shares traded on China’s stock exchanges jumped to a more than four-month high on Thursday. Buying momentum is the highest since April, according to a relative strength index.
The upbeat sentiment is a turnaround from a month ago, when a sudden plunge in the yuan helped sparked a sell-off in Shanghai shares. Positive news on the trade war, with China and the U.S. saying they are ready to restart talks, signals from Beijing that stimulus is on the way, and a concession by Hong Kong’s government to appease protesters all helped trigger buying.
"The stock market is in a good position to attract further northbound inflows, thanks to the policy boost, better liquidity expectations and stronger risk appetite," said Mark Huang, analyst at Bright Smart Securities. He added that overseas investors are favoring financial and infrastructure shares.
--With assistance from Amy Li.
To contact Bloomberg News staff for this story: Ken Wang in Beijing at ywang1690@bloomberg.net;Ludi Wang in Shanghai at lwang191@bloomberg.net
To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Philip Glamann
©2019 Bloomberg L.P.
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