Foreign investors are buying more Chinese stocks this year, increasing their rates in mainland markets as Beijing and Washington prepare to resolve protracted trade war.
This changed the fate of China's tech stocks. The sector, which faced sustained selling pressure in the past year, is now at new highs as foreign investors continue to buy Chinese stocks for 26 straight sessions..
Beijing's moves to build its own technology capabilities, including the launch of the Nasdaq-style STAR market in July, have been another reason attracting foreign investors to the Chinese tech sector..
And this despite lingering concerns about Washington scrutinizing and blacklisting Chinese tech companies such as telecom giant Huawei and some of the world's leading artificial intelligence firms..
In 2019, foreigners spent over 190 billion yuan ($ 26.99 billion) buying shares listed on the high-tech Shenzhen Stock Exchange, up from 113 billion yuan in 2018.
They were net sellers only in April and May, during a period of escalating US-US trade tensions..
Shares of Shanghai-based semiconductor firm Will Semiconductor are up more than 400% this year and their price-to-earnings (PE) ratio has risen to over 5,000, according to Refinitiv data, according to Refinitiv data..
This compares to the US PE ratio for US-listed semiconductor firm Vishay Intertechnology..
Will, which many stock analysts recommend as a leader in the Chinese chip industry, reported nearly half its net profit in the first nine months. However, foreign investors increased their stake in the company to 21 million shares, which corresponds to 15% of the shares.
Beijing-based software company Glodon also saw its estimates hit record highs.
According to HKEX and company statements, foreign investors own more than 5% of the shares of more than a dozen Chinese technology companies..
The index, which tracks China's major information technology companies, peaked in more than two years on Wednesday after growing 70 percent this year, up from 21 percent in the benchmark Shanghai index..
So far, mostly foreign investors are increasing access to China's tech industries as the country opens up its markets, while most domestic institutional investors are less willing to continue to invest in the sector, analysts at Zhongtai Securities note..
In November, half a dozen tech stocks in the STAR market dropped below their initial public offering prices as investor euphoria subsided.