(Yicai) July 25 -- Overseas investors further increased their allocations to Chinese yuan assets in the first half of the year, with a particular focus on stocks, according to the Shanghai branch of China’s central bank.

"Foreign investors continue to increase their yuan asset allocation, highlighting the confidence of international capital in the long-term stability and improvement of the Chinese economy,” Wu Jinyou, deputy director of the foreign exchange department at the People’s Bank of China Shanghai Head Office, told a press conference yesterday.

There was a substantial net increase in foreign holdings of domestic bonds, and a revival of foreign investment in onshore stocks, shifting from net outflows last year to net inflows this year, with May showing a particularly steep pickup, he said.

Shanghai’s foreign-related economy remained active in the first half despite complex and changing external shocks, Wu noted. Of the city’s USD2.77 trillion foreign-related economy, income fell 18 percent to USD1.32 trillion and expenditures rose 19 percent to USD1.45 trillion.

According to Wu, Shanghai’s first-half cross‑border receipts and payments exhibited three standout trends: steadily rising trade revenues, an ever stronger capital market appeal, and corporate foreign exchange hedging rates climbing to 42.2 percent from 46.9 percent a year earlier.

Deepening market access and attractive valuations should further bolster the Chinese stock market’s appeal to global investors, Wu predicted.

The PBOC’s Shanghai branch will keep enhancing the convenience of cross‑border trade and investment, promote high‑level regional opening-up and innovation, and closely monitor the forex market to ensure overall stability in Shanghai’s cross‑border capital flows, he added.

Editor: Futura Costaglione