In May, the bank's surplus in foreign exchange settlement and sales reached US $1.5 billion; As of June 22, the cumulative net inflow of northbound funds since June has been 41080 billion yuan... A number of data show that although the Fed's continued interest rate hike has brought tightening effects to global markets, especially emerging markets, China's cross-border capital flows are generally balanced and stable, and overseas investors have a strong driving force to invest in domestic financial markets. Insiders interviewed by the reporter of the economic information daily said that the attractiveness of China's financial market and the return on RMB assets will be more determined by economic fundamentals. Under the background of China's prominent economic resilience and the continuous opening of the financial market, RMB assets are still attractive to medium - and long-term investors around the world. Overall equilibrium of cross-border capital flows On the whole, the bank's foreign exchange settlement and sales and foreign-related income and expenditure have maintained a surplus pattern. According to the statistical data released by the State Administration of foreign exchange on June 22, in dollar terms, in May 2022, the bank's foreign exchange settlement was USD 205billion, the foreign exchange sales was USD 203.5 billion, and the surplus of foreign exchange settlement and sales was USD 1.5 billion. Wangchunying, deputy director of the State Administration of foreign exchange and spokesman, said that the net inflow of cross-border capital related to the real economy such as trade in goods and direct investment remained at a high level, and continued to play a basic role in stabilizing cross-border capital flows. In terms of cross-border securities investment, according to the data of the International Finance Association, in April, China's stock market and bond market had net inflows of US $1.019 billion and US $12.371 billion respectively. In May, the net inflows of foreign capital in the stock market rose to US $2.731 billion, while the net inflows in the bond market slowed to US $1.99 billion. As of June 13, the net inflow of foreign capital in the stock market in the current month had reached US $4.168 billion, and foreign capital has a strong desire to increase its positions in China's stock market. Wind data also shows that as of June 22, the cumulative net inflow of northbound funds since June has been 41080 billion yuan. In the 15 trading days so far, 11 trading days have been net purchases. Liu Hui, senior fund manager of Jingshun investment, said that from the perspective of valuation, the valuation level of China's stock market is at a historical low, and also at a low level compared with overseas markets. Under the influence of prudent monetary policy and proactive fiscal policy, China's economy will achieve a better recovery in the second half of the year, thus supporting the performance of the stock market. With the stabilization and rebound of a shares, the net inflow of foreign capital into a shares increased significantly compared with the first quarter. According to Cheng Shi, chief economist of ICBC international, from historical experience, the inflow of foreign capital in the bond market is more sensitive to the interest rate difference between China and the United States. Therefore, under the tightening background of the Federal Reserve raising interest rates by 50 basis points in May and 75 basis points in June, the net inflow in the bond market tends to slow down. The inflow of foreign capital into the stock market is more related to the fundamentals of China's economy. Even in the past tightening cycle of the Federal Reserve, if the basic mask is resilient, foreign capital will still net buy Chinese stock assets. At present, the signs that China's economic market has bottomed out and stabilized are basically confirmed. It is expected that China's cross-border capital flows will be moderate in the future. Long term attractiveness of RMB assets The "vote of confidence" of overseas investors in China's financial market highlights the growing long-term attractiveness of RMB assets. Wangyouxin, a researcher at the Bank of China Research Institute, said that in the short term, the world is currently in a new round of monetary policy tightening cycle, with overall liquidity tightening, high inflation and prominent supply chain bottlenecks. Under this background, the financial market has large short-term volatility. In his opinion, if only from the perspective of investment strategy, appropriately adopting conservative operation and reducing the allocation of financial assets with high volatility is a reasonable investment strategy choice at present. However, in the long run, the impact of monetary policy will gradually converge, and the attractiveness of China's financial market and the return on RMB assets will be more determined by economic fundamentals. Considering that China's economic growth is still leading the world and its monetary policy remains stable, the real return on RMB assets is still positive. The data shows that in recent years, the allocation of RMB assets by overseas central banks and funds tracking international indexes has increased significantly, but on the whole, the current allocation of RMB assets by overseas investors is still low. "There is still much room for overseas investors to further increase their holdings of RMB assets, both in terms of the 2.79% share of RMB in the global foreign exchange reserves and in terms of the 3% to 5% share of foreign capital in the domestic stock market and bond market." Wangchunying said earlier. Liulinan, head of macro strategy in Greater China of Deutsche Bank, also said that in the short term, RMB assets are expected to highlight their unique allocation value in the US dollar interest rate hike cycle. In addition, with the characteristics of diversification and medium - and long-term appreciation potential, RMB assets are still attractive to global medium - and long-term investors. For some investors with medium - and long-term allocation needs, it is now a window opportunity to allocate RMB assets. The market continues to open and consolidate the foundation Looking forward to the future, China's financial market will further promote opening-up and consolidate the foundation for attracting long-term capital inflows. Recently, we have taken continuous measures to promote the opening and connectivity of financial markets. The people's Bank of China, China Securities Regulatory Commission and the State Administration of foreign exchange recently issued a joint announcement to coordinate and simultaneously promote the opening of inter-bank and exchange bond markets. According to relevant announcements, the scope of foreign institutional investors admitted to the market has not changed, but the procedures have been further simplified, and the scope of investment has also been extended to the exchange bond market. In addition, the China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission agreed in principle that the exchanges of the two places would include the qualified exchange traded open-end funds (exchange traded funds) (hereinafter referred to as "ETFs") into the interconnection. The inclusion of ETF in the subject matter of interconnection means that the A-share market will usher in more "living water". "In the next stage, we will continue to unswervingly promote the reform and opening up of China's financial market, further simplify the procedures for foreign investors to invest in the Chinese market, enrich the types of assets that can be invested, improve data disclosure, continue to improve the business environment, extend the trading hours of the inter-bank foreign exchange market, continue to improve the convenience of investing in the Chinese market, and provide opportunities for foreign investors and international institutions to invest in the Chinese market And create a more favorable environment. " The people's Bank of China said earlier. It is worth noting that the risk prevention and control system will also be firmly established while the finance is open. Wangyouxin said that China's macro Prudential policy tool system for cross-border capital flows has been continuously improved, and policy adjustments have been timely and effective, which can effectively prevent abnormal fluctuations in cross-border capital and exchange rates. It is expected that the overall risk will be controllable. (Xinhua News Agency)