Investor sentiment around China is at its most bullish

Investor sentiment is now at its most bullish according to findings of the newly released 2018 Standard Chartered RMB Investors Forum Survey. Investors have stepped up their activity with 88 per cent of respondents investing in China, up from 69 per cent in 2017 and with 76 per cent of them planning to grow their China investments, up from 69 per cent in 2017.

A key finding from this year’s survey is that investment into China is now fully globalised. North America emerged as one of the most positive regions with 88 per cent of respondents investing in China and 87 per cent looking to increase their participation. Singapore also scored highly with 91 per cent currently investing and almost all expecting to increase their investments over the next 12 months.

Clarity on rules from regulators remains one of the priority issues, with 45 per cent of respondents saying it is the one of the most important investment factor. It is however now one of three concerns that rank fairly evenly along with funding flexibility (44 per cent) and speed and simplicity of application and/or account opening (41 per cent). The survey gives clear evidence that concerns move away from the rulebook and towards more practical considerations around operations and usability of the various investment channels.

Commenting on the survey findings, Margaret Harwood-Jones, Global Head, Securities Services, Transaction Banking, Standard Chartered, said, “The headline finding is that sentiment towards China has never been better and never have more people invested in China than today. More importantly, 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.”

Illustrating the move towards practical considerations, findings from the survey showed that one of the reasons sentiment is so positive on investing in China is because of the simplicity, clarity and flexibility on the new access mechanisms such as Stock Connect and Bond Connect.

Just over three quarters of respondents say that the new channels have the biggest influence on their decision to increase their China investment allocations. In addition, when considering future investments into China, 48 per cent of investors plan to use Stock Connect and 23 per cent expect to use Bond Connect.

However, despite being the top channels used to access China investments, the Connects still have some drawbacks where investors are hoping for improvements to be made. These include the ability to trade on a Hong Kong public holiday and more importantly the introduction of delivery versus payment on Bond Connect. The survey also highlighted other issues that China’s regulators need to address, from clarification on the treatment of tax, to the harmonisation of investment channels.

Now in its third year, the Standard Chartered RMB Investors Forum Survey gathered responses from over 180 investors, regulators and custodians in Asia, Europe and North America, gauging their views on the issues impacting investors wanting to access China’s onshore markets. Based on the survey results a series of roundtable discussions with key markets participants were also conducted in Hong Kong, Singapore, Taiwan, Korea, US and the UK where investment professionals shared their insights.