Foreign investors eye vehicle, real estate sectors in China

China's vehicle, real estate and non-ferrous metal sectors are being wooed by foreign investors, according to the latest financial reports of the listed companies.

Of the 1,156 Shanghai and Shenzhen-listed companies that have released their first-quarter financial reports, 52 have qualified foreign institutional investors, or QFIIs, among their top 10 stockholders, according to Securities Daily.

Foreign investors were most active in the vehicle, real estate, infrastructure and non-ferrous metal sectors, with their holdings up by 29.7 million shares.

For example, foreign investors increased their stake in Zhengzhou Yutong Bus Co Ltd by 10.17 million shares, making the vehicle sector the one with the largest growth in foreign holdings.

Ping An Securities said the auto industry is reaching the bottom and investors are snapping up low-priced stocks.

Infrastructure-related stocks have long been a favorite of foreign institutional investors. At the end of last year, foreign institutional investors were among the top 10 shareholders in 135 listed companies. Forty-six out of the 135 companies, or 34 percent, are related to infrastructure, such as construction materials, machines and equipment, transportation and steel.

"Infrastructure is a priority of this year's policymaking. Industries related to it are expected to benefit," said Huang Zhanwei, research manager of the fund company Fundsupermart.

Besides, mechanical equipment companies are favored by foreign institutional investors, and have increased holding of 37.13 million shares, according to National Business Daily.

Foreign investors offloaded 87.75 million shares, with the liquor maker Wuliangye Group Co Ltd and the cement maker Anhui Conch Cement Co Ltd seeing the largest declines.

Steel, food and beverages, and biomedicine saw decreases in their holdings by foreign investors in the first quarter, according to National Business Daily.

By March 23, 74.5 percent of the investment volume under the QFII program had been injected into the domestic stock market. The other part went to bonds and bank deposits, according to the China Securities Regulatory Commission.

The value of the shares held by qualified foreign institutional investors accounted for 1.09 percent of the total traded A shares.

Foreign investors now hold 17.513 billion yuan ($2.78 billion) in A shares, 271 million yuan more than in the fourth quarter of last year.

The expanding role of QFII in China's stock market is a result of expanding foreign investment quotas granted by Chinese regulators.

Last month saw the largest increase of the QFII quota since the launch of the program in 2002.

In early April, the CSRC, the People's Bank of China and the State Administration of Foreign Exchange decided to raise the amount available for qualified foreign institutional investors by $50 billion, bringing the total quota to $80 billion.

Last month, China granted 11 new overseas investors the qualification to buy domestic stocks and bonds, bringing the total number of qualified foreign institutional investors to 158.

zhengyangpeng@chinadaily.com.cn