(Yicai Global) May 29 -- The Shenzhen Stock Exchange issued its third warning today that overseas holdings in three firms -- Midea Group, Centre Testing International Group and Suofeiya Home Collection -- are in danger of reaching the upper limit for foreign ownership. But the alert has been to no avail.

Using the Qualified Foreign Institutional Investor program, the Renminbi Qualified Foreign Institutional Investor scheme, the Shenzhen-Hong Kong Stock Connect mechanism and other channels, foreign investors have continued to boost their stakes in mainland stocks despite the Shenzhen bourse sounding the alert 36 times already this month.

According to regulations, foreign ownership in Chinese-listed firms must not exceed a total of 30 percent. However, in reality, overseas investors will be blocked from buying in once their stakes reach 28 percent. An alert is triggered at 26 percent.

As of yesterday’s close, foreign investors held 27.35 percent of consumer electronics maker Midea, 26.11 percent of the third-party certification and testing firm Centre Testing and 27.38 percent of furniture manufacturer Suofeiya. On May 27, when the Shenzhen Stock Exchange issued its first warning, overseas holdings in the three were 27.3 percent, 26.3 percent and 26.2 percent respectively.

A red flag was also raised today about the 26.11 percent foreign ownership in medical researcher Hangzhou Tigermed Consulting.

The allure of mainland equity is on the rise and there has been a strong surge in foreign capital into China. Northbound funds, from Hong Kong to the mainland, hit a record high last year of CNY351.7 billion (USD49.2 billion). So far this year, CNY60.4 billion has been brought in through the stock connect program.

Midea [SHE:000333] rose 1.5 percent today to close at CNY59.02 (USD8.26). Centre Testing [SHE:300012] gained 2.5 percent to CNY18.10 (USD2.53), while Suofeiya [SHE:002572] jumped 7.4 percent to CNY25.85. Tigermed [SHE:300347] added 3.8 percent to CNY84.85.

Editor: Kim Taylor