Foreign capital mass layout of China’s stock market Technology stocks valuation rose

Foreign investment in the mainland’s A-share market has increased as long-delayed trade disputes have eased, the longest period of the year so far. China’s technology stocks have thus been the lucky ones. Such stocks, which had been under pressure to sell last year, are now hitting new highs, with overseas investors buying A-shares for 26 consecutive trading days. China’s technology stocks have thus been the lucky ones. Such stocks, which had been under pressure to sell last year, are now hitting new highs, with overseas investors buying A-shares for 26 consecutive trading days.

Foreign capital mass layout of China's stock market Technology stocks valuation rose

China has taken steps to boost its technological prowess, including the launch of a science-and-technology board in July, which is one of the reasons it attracts foreign investment into the country’s technology industry.

Foreign capital mass layout of China's stock market Technology stocks valuation rose

Foreign purchases on the Shenzhen Stock Exchange have exceeded Rmb190bn ($26.99bn) so far this year, compared with Rmb113bn in 2018.

The months in which foreign sales were sold net this year were only April and May when trade frictions escalated.

Foreign capital mass layout of China's stock market Technology stocks valuation rose

Shanghai-based semiconductor company Weir (603501) has risen more than 400 per cent this year, with a price-to-earnings ratio of more than 5,000, according to Lufut.

By comparison, Vishay Intertechnology, a US-listed company, trades at 12 times earnings.

Weir’s shares reported a net profit for the first nine months of the year, but at the same time showed an increase of 21 million shares in foreign holdings, accounting for 15 per cent of the shares it listed and traded in Shanghai. Many stock market analysts have praised Weir’s leadership in China’s chip industry.

The valuation of Beijing software maker Quanlianda (002410) also hit a record high.

Foreign capital mass layout of China's stock market Technology stocks valuation rose

Foreign ownership of more than a dozen Chinese technology companies is more than 5%, according to HKEx data and company statements.

An index of china’s biggest information technology companies hit a more than two-year high on Wednesday, up 70 per cent so far this year, compared with a 21 per cent rise in the Shanghai index over the same period.

Foreign capital mass layout of China's stock market Technology stocks valuation rose

Analysts at Sino-Thai Securities said in a report that as China opened its market, it has so far been dominated by foreign investors in The Chinese technology sector, which most domestic institutional investors are reluctant to invest in.

As investor enthusiasm cooled, six of the tech companies listed on the board fell below the initial public offering price in November.

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