Chinese mainland stocks jump on overseas inflows

China A-shares on Monday posted the highest daily turnover in over a month, with overseas capital swarming into the Chinese mainland market.

The mainland saw a net influx of 16.3 billion yuan (US$2.5 billion) via the Stock Connect schemes linking Shanghai and Shenzhen with Hong Kong, the second highest inflow this year.

BYD Company, Muyuan Foods Co, Sungrow Power Supply Co and Kweichow Moutai Co were among the hottest stocks for overseas capital.

Overseas funds have been pouring onto the mainland since last week — a net influx of about 40 billion yuan in the past six trading sessions.

Volume on the two major mainland bourses was 861.6 billion yuan, up 169.4 billion yuan from the previous session — and the highest a high since March 10.

Continued capital inflows from overseas will prompt the market to revise earlier pessimistic expectations, which could be the catalyst for a bull market, according to Zheshang Securities.

At the same time, the release of quarterly reports and semiannual forecasts can also serve as a positive boost for the market in May-July, it said.

Haitong Securities, meanwhile, said that this year, the potential market for public funds is expected to exceed 1.1 trillion yuan, and foreign capital is seen flowing in faster than in previous years.

It pointed out that among industries, potential public funds and foreign capital both seem to have a preference for manufacturing, especially machinery and equipment, electrical equipment, and automobiles.

The benchmark Shanghai Composite Index rose 1.49 percent to 3,477.55 points, while the smaller Shenzhen Component Index surged 2.89 percent to 14,117.8 points.

The ChiNext Composite Index rocketed 4.14 percent, the biggest daily gain in over 14 months, to 2,898.73 points.

The STAR 50 Index closed 1.91 percent higher at 1,299.01 points.

Carmakers, auto parts firms and new energy vehicle companies all soared sharply to lead the gains, as Huawei Technologies launched a series of intelligent car components and automated-driving solutions on Sunday, including one that runs on its HarmonyOS operating system.