Global investors bullish on Chinese market

China's stock market is likely at the beginning of the largest and most sustainable bull run in the past decade, supported by containing of COVID-19 pandemic and economic recovery, an expert said.

Jing Liu, professor and associate dean of Cheung Kong Graduate School of Business, said Chinese government's steps to contain the pandemic have proved effective. Meanwhile, China has seen positive GDP growth since the second quarter, and the country is expected to be the only major economy to see positive growth in the past year on a global scale. Both reasons have boosted interests in investment and confidence from global investors.

Liu added that China's reform in capital market, efforts to build Hainan island into a high-level free trade port, the signing of Regional Comprehensive Economic Partnership, together with other measures showed that China is on the fast track of deepening reform and opening up, which is another reason that may spur growing interests from global investors.

"Among the world's major economies, China is the only country that has maintained a positive interest rate of around 2.5 percent. The COVID-19 pandemic has caused many central banks around the world to quickly increase money supply and reduce their benchmark interest rates to zero. China's market will become very attractive for global investors under this circumstance," Liu said.

Investors also showed stronger willingness to invest in stock market, said a recent report by CKGSB on investors' willingness to invest in stocks and expectations of China's capital market in the fourth quarter.

According to the report, total number of newly increased stock market investors in the fourth quarter rose by 20.3 percent compared with the previous quarter. About 67.5 percent of respondents are expecting A-share market to rise, up 9 percentage points from the previous quarter. Fifty percent of respondents forecast that Hong Kong stocks would rise, up 15 percentage points from the third quarter.

The report said the investor optimism comes from their confidence in fundamentals as well as controllable risks. About 53 percent of respondents believe that GDP growth can exceed 5 percent in the future. About 45 percent held the view that the net profit growth of A-share listed companies could exceed 10 percent in the future, an increase of 7.7 percentage points over the previous quarter.