(Yicai) Aug. 12 -- As the Chinese mainland indexes continue to rally, foreign investors’ enthusiasm for onshore shares remains high, with industry leaders being their main investment targets.

Power transmission and distribution equipment giant Sieyuan Electric [SHE: 002028], precision gear transmission system developer Shuanghuan Driveline [SHE: 002472], transformer tap charger maker Huaming Power Equipment [SHE: 002270], and relay industry leader Hongfa Technology [SHA: 600885] were among the most sought Chinese mainland stocks by foreign investors.

Their foreign ownership percentages all exceeded 24 percent as of Aug. 8, according to data from the Shanghai and Shenzhen bourses. The limit for foreign ownership in a mainland-listed Chinese company is 30 percent, with a purchase suspension triggered at 28 percent.

Among the four, Sieyuan Electric recently approached the limit. In fact, the Shenzhen Stock Exchange suspended foreign investors’ purchase of the company’s shares in late July when its foreign ownership reached 28.07 percent.

Morgan Stanley, Temasek Fullerton Alpha, and other well-known foreign institutions appeared on the top 10 shareholders list of the above four companies this year, Yicai learned.

The recent increase in Chinese mainland stocks’ foreign ownership is driven by factors such as strengthening expectations for a global liquidity inflection point, weakening US dollar, and international capital flow into emerging markets, Yan Kaiwen, chief strategy analyst at Huaxin Securities, told Yicai.

Overseas investors are using the stock connect programs between Hong Kong and the Chinese mainland to allocate assets in undervalued areas, causing the foreign ownership percentage of some leading stocks to approach the purchase limit, Yan noted.

There are other Chinese mainland-listed industry leaders that have been the focus of overseas capital this year. For example, insurance behemoth Ping An Insurance and liquor giants Wuliangye and Kweichow Moutai each boasted more than 80 foreign institutional investors at the end of June, according to data from Wind Information.

Editor: Futura Costaglione