Investors in South Korea have been actively buying Chinese stocks in the pharmaceutical, biotechnology, and electric vehicle (EV) sectors, with net purchases totaling 28 billion won ($21.5 million) this month. Market watchers attribute this surge in investment to the local investors’ belief that these sectors are undervalued and have high growth potential.
The renewed investor sentiment can be attributed to the Chinese government’s economic stimulus policy, which has boosted confidence in the market. Additionally, optimism surrounding improved Beijing-Washington ties following the U.S.-China summit at the APEC gathering in San Francisco on November 15 has contributed to the increased investments.
According to data from the Korea Securities Depository, local investors purchased a net total of 35.1 billion won worth of Chinese stocks between November 1 and November 15, a significant increase from the net purchase of 200 million won last month. This shift marks a turning point from the net sell-off of 107.5 billion won between June and September.
Among the top Chinese companies receiving investment, WuXi AppTec, a global pharmaceutical, biopharmaceutical, and medical device manufacturer based in Shanghai, accounted for a substantial portion of the net purchases. Another prominent company attracting investment was BYD, a manufacturer of electric vehicles and EV batteries.
The positive performance of these companies is evident, with WuXi AppTec seeing a surge of 37.7 percent between July 1 and November 15. Additionally, BYD reported record-high sales in the third quarter, outperforming Tesla’s figures for the first nine months of the year.
Experts in the field recommend investors increase their holdings in the pharmaceutical, biotechnology, and semiconductor sectors, as these are considered the new growth market players in the fourth quarter. Conservative management of investment portfolios is also advised to ensure stability amidst market fluctuations.
Frequently Asked Questions (FAQ)
1. Why are South Korean investors buying Chinese stocks in the pharmaceutical, biotech, and EV sectors?
South Korean investors believe that these sectors are undervalued and offer high growth potential, leading them to actively purchase Chinese stocks in these areas.
2. What factors have contributed to the surge in investments?
The surge in investments can be attributed to the Chinese government’s economic stimulus policy, which has instilled confidence in the market. Additionally, optimism regarding improved Beijing-Washington ties following the recent U.S.-China summit has further boosted investor sentiment.
3. Which companies have received the most investment?
WuXi AppTec, a global pharmaceutical, biopharmaceutical, and medical device manufacturer based in Shanghai, has received a significant portion of the investment. Another notable recipient is BYD, a manufacturer of electric vehicles and EV batteries.
4. What is the performance of these companies?
WuXi AppTec has experienced a surge of 37.7 percent between July 1 and November 15, showcasing its positive performance. BYD has also reported record-high sales in the third quarter, outperforming Tesla’s figures for the same period.
5. What recommendations do experts have for investors?
Experts recommend increasing holdings in the pharmaceutical, biotechnology, and semiconductor sectors, as these are considered the new growth market players. Additionally, they advise maintaining a conservative management approach to investment portfolios to navigate market fluctuations effectively.