(Yicai) Nov. 6 -- The Chinese mainland stock market has experienced a significant recovery in the third quarter, with foreign investors buying mostly shares of industry leaders and banks.

Chinese distillers Kweichow Moutai and Wuliangye and insurer Ping An Insurance each had more than 80 foreign institutional investors at the end of the third quarter, according to data from Wind Information.

Over 80 Chinese mainland stocks, including courier SF Holding, original design manufacturer Luxshare Precision, lender Industrial and Commercial Bank of China, and brokerage firm Citic Securities, boasted more than 50 foreign institutional investors each as of Sept. 30, the Wind data also showed.

In terms of foreign investment value, battery giant Contemporary Amperex Technology, Kweichow Moutai, and home appliance behemoth Midea Group ranked top three, with CNY265.7 billion (USD37.3 billion), CNY88.1 billion (USD12.4 billion), and CNY71.2 billion, respectively, according to Wind.

Lenders occupied seven spots in the top 10 of Chinese mainland stocks by number of foreign-held shares. Thirty-two foreign institutional investors held a total of nearly 2.4 billion shares of Bank of Nanjing, and 42 others held 1.6 billion shares of Bank of Ningbo.

In terms of market value, foreign investors mainly focused on industry leaders. Forty-two mainland stocks had foreign investors holding more than CNY10 billion (USD1.4 billion) in market capitalization as of Sept. 30. They include CATL, Kweichow Moutai, and Midea, as well as mining giant Zijin Mining, drugmaker Hengrui Pharmaceuticals, new energy vehicle titan BYD, and automotive glass supplier Fuyao Glass Industry Group.

Foreign portfolio adjustments are also drawing close attention. Sixty-eight foreign institutions held shares in China State Shipbuilding Corporation at the end of the third quarter, up over 40 percent from the end of the second quarter. The number of foreign institutional investors also increased for other mainland stocks, including Kweichow Moutai, BYD, and utilities firm China Yangtze Power.

UBS hiked its stake in Anhui Ruineng Technology in the third quarter, becoming its third-largest shareholder, according to the listed Chinese battery management firm. Goldman Sachs Group, JPMorgan Chase, and Merrill Lynch International also made it into Ruineng Tech’s top 10 largest shareholders list.

Merrill Lynch International, Goldman Sachs, JPMorgan Chase, and Morgan Stanley became new top 10 shareholders of Chinese tire maker Zhongce Rubber Group, and UBS and Barclays became new top 10 shareholders of ultrasound systems giant Chison Medical Technologies.

Even though market volatility recently intensified, the medium-term outlook for the Chinese capital market remains positive, said Meng Lei, a China equity strategist at UBS Securities.

Driven by demand expansion from artificial intelligence and the push for self-sufficiency, the Big Tech sector has maintained relatively rapid profit growth, boosting the overall earnings of non-financial sectors, Meng noted, adding that UBS expects the net profit of Chinese mainland listed stocks to grow about 6 percent this year from the year before.

The Chinese stock market is entering a more sustainable uptrend, with major indexes expected to rise about 30 percent by the end of 2027, mainly because of a potential structural trend of capital inflows into Chinese equities as the reallocation of household assets into stocks could bring in trillions of yuan in funds, equal to hundreds of billions of US dollars, Goldman Sachs predicted.

Externally, driven by the need for investment diversification and a continued underweight position, the Chinese market has re-entered the focus of global investors, Goldman Sachs noted.

Editor: Futura Costaglione