Overseas Investments Focused on the US... Profits Are Lucrative in China

Average Return of Chinese Funds 24.51%
Exceeds Global Return of 12.22%
US Stands at 13.3% Since Early Year
Impact of COVID Resurgence and Presidential Election

[Asia Economy Reporter Oh Ju-yeon] Although most of the funds from domestic investors who ventured into overseas stocks and funds this year were concentrated in the United States, investments in China have proven to be more profitable in terms of returns. The securities industry expects that if Democratic candidate Joe Biden gains an advantage in the upcoming U.S. presidential election early next month, U.S.-China relations could be reset, leading to mutual cooperation and normalization of Chinese government policies.

According to financial information provider FnGuide on the 28th, a comparison of fund returns by overseas region since the beginning of the year showed that China-related funds had significantly higher returns. The average return of 172 Chinese funds since the start of the year was 24.51%, surpassing the global fund return of 12.22%. The returns of Chindia funds, which combine Chinese and Indian stock markets, and Greater China funds, which mix Chinese and neighboring Chinese-speaking countries' stock markets, were also high at 33.20% and 31.22%, respectively, outperforming funds from other regions.

In the case of the United States, which sparked the overseas stock craze this year, fund returns fell short of expectations. The average return of 55 North American funds since the beginning of the year was 13.30%, only about half of the Chinese fund returns. This is interpreted as a result of the differing progress of the COVID-19 pandemic.

China's stock market was hit hard by the COVID-19 outbreak in February but has since stabilized, whereas the U.S. is currently in a volatile phase due to the recent resurgence of COVID-19, concerns over economic contraction, increased uncertainty ahead of the U.S. presidential election, and delays in agreeing on additional stimulus measures. In some regions, including emerging European countries, the resurgence of COVID-19 has caused fund returns to plummet.

In Europe, returns since the beginning of the year were -8.91%, emerging Europe -27.54%, and Russia -22.13%. Returns for Latin America (-30.09%) and Brazil (-35.54%) were even lower. Additionally, Vietnam (-2.35%), India (-5.08%), and Japan (-3.99%) also posted negative fund returns this year.

Recent 1-month and 3-month returns showed differences by country. Vietnam (4.26%, 9.11%), India (2.67%, 5.47%), and Japan (0.38%, 4.47%) returned to positive territory, but funds from emerging Europe (-1.43%, 9.39%), Europe (0.13%, -4.75%), Russia (-1.78%, -7.08%), and Brazil (-0.94%, -11.35%) remained in the negative range.

Although the return gap between Chinese and U.S. funds has widened, both have consistently recorded positive returns over the recent 1-month, 3-month, 6-month, year-to-date, and 1-year periods, showing outstanding performance compared to funds from other regions.

Meanwhile, domestic investors continue to pour money into U.S. funds despite Chinese funds showing somewhat higher returns. Although the U.S. stock market's upward momentum has slowed due to concerns over the resurgence of COVID-19 and delays in additional stimulus agreements, fund inflows have continued. North American fund assets increased by 965.3 billion KRW since the beginning of the year, while 1.0635 trillion KRW flowed out of Chinese funds. The trend over the past three months is similar: Chinese funds decreased by 239.2 billion KRW, while North American funds increased by 276.7 billion KRW. During this period, returns were 4.85% for China and 3.62% for the U.S.

The securities industry predicts that China's economy will rebound faster than other countries after COVID-19, and capital inflows into the stock market will be prominent due to the yuan's appreciation and expectations for economic recovery after the U.S. presidential election. Kim Kyung-hwan, a researcher at Hana Financial Investment, analyzed, "It will be difficult for U.S.-China relations to fully recover next year, but the easing of uncertainty is a more favorable aspect."

This content was produced with the assistance of AI translation services.