Foreign investors have been piling into Chinese stocks

Joe Raedle/Getty Images

It’s been a huge couple of weeks for the Chinese stock market. After dropping more than 32% from the recent high, the plethora of measures instituted by the Chinese government and regulators has helped push the market towards the biggest two-day rally since 2008.

With all the turmoil you’d be forgiven for thinking that global investors would not touch Chinese sticks with a barge pole.

Not so according to the latest “flow of funds” report from the ANZ’s currency strategy team.

They report:

For this week, China equity funds registered an inflow of USD12,647m vs USD4,318m in the previous week.

That’s not a typo. Foreigners have bought $US17 billion in Chinese stocks in the two weeks up to July 8, and $US12.6 billion in the past week alone.

The ANZ highlights it prefers to look at the “four week moving aggregate, which showed a net inflow of USD4,284m over the last four weeks.”

No doubt the emergency measures might have spooked a few foreigners this week. But there is no denying this is a remarkable amount if buying in a short space of time.

Here’s the chart showing the huge spike.

Some major institutional players, including Goldman Sachs, have been saying it’s time to buy Chinese stocks on the current dip.

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