FSD Holdings Says China Stocks Post Monthly Gains Ahead of MSCI's Listing
TOKYO, June 6, 2018 /PRNewswire/ - FSD Holdings has commented on China's domestic stocks as they swung back to deliver their best monthly performance in nearly three years, outpacing offshore-listed companies and tracking a rebound for global equities.
The rally followed the worst week for equities in more than six months, driven in part by investors' concerns about U.S. tariffs targeting China.
The buying sentiment also strengthened as China's stocks are poised to debut on a closely followed global index, the MSCI Inc.'s benchmarks, next Friday.
FSD Holdings economist, Royta Morioka, said that "Despite loose liquidity conditions, trade tension with the US will remain in focus as investors in real estate and consumer sectors watch to see if it will produce negative implications for the broader global economy."
China's effort to open its door to foreign investors has received a big push after MSCI said it would add 222 A-share large-cap stocks from both the Shanghai and Shenzhen exchanges, which that will account for 0.73 percent of its flagship index.
Many Chinese shares are already listed in MSCI's emerging markets index, including Tencent and Alibaba, but this is confined to those listed offshore in Hong Kong and the US.
News that Beijing and Washington are close to avert a trade war put investors in a buying mood this month, giving the market its best day since January 15 and erasing about half of its losses in April.
Analysts at FSD Holdings also stressed that the stock market is having a fairly positive month and competitive industries, such as the financial services, benefit from a wake-up call for global investor after opening up the domestic markets.
The mainland's equity market is the second largest in the world, yet foreign investors hold less than 2 per cent of its assets. As such, MSCI's move gives China's stocks access to $1.6 trillion of investment funds that track the index to buy the stocks.
International investors were reluctant to pump their tiny participation into China's financial markets because of growing concerns over the nation's massive debt mountain and the dangers of wasteful loans that were given to state-owned companies to spur economic growth.
SOURCE FSD Holdings
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