(Yicai) Aug. 6 -- The capital market in the Chinese mainland is unlikely to be significantly affected by the sharp declines in the Japanese and US stock markets.

The changes in overseas markets may not have as large an impact on the Chinese mainland market as on other Asian markets, according to Chinese asset management and private equity firm Beijing StarRock Investment Management. However, they may bring structural changes that require adjustments in investment strategies.

Japan's Nikkei 225 Index closed down 12.4 percent yesterday, its largest single-day decline, while the Tokyo Stock Price Index dived 12.2 percent, the biggest daily drop in eight years. US stock indexes followed suit. The Dow Jones Industrial Average, Standard & Poor's 500 Index, and Nasdaq Composite Index yesterday fell 2.6 percent, 3 percent, and 3.4 percent, respectively.

The Chinese mainland market is impacted mainly by domestic policy expectations and economic situation, StarRock Investment noted, adding that it will pay more attention to assets related to domestic needs and with larger long-term development space, especially undervalued assets of premium underlying properties. Meanwhile, it will avoid investing in sectors with lower risk returns, such as internet, transportation, clothing, and social services.

In the long run, Chinese mainland stocks are relatively independent, with their core driving forces remaining fundamentals and policy environment, Liu Youhua, deputy director of the wealth research division of PE fund data platform PaiPaiWang, told Yicai. External markets' intense fluctuations are helping more offshore funds return to the mainland at a quicker pace, Liu noted.

Given the extremely unstable geopolitical environment and the facts that historically high US dollar interest rates are about to enter a cutting cycle and that the Japanese yen interest rate hikes indicate the beginning of global capital returning to Asia, China is the best choice for capital return, not only in terms of valuation depression but also as a safe haven, said Chen Xingwen, chief strategist at a Chinese PE firm, known as Heiqi in Chinese.

Morgan Stanley Fund Management is more upbeat about sectors that will benefit from the US Federal Reserve's rate cuts, such as innovative drugs and gold. According to the fund manager, fields with stable fundamentals and policy support, such as home appliances and utilities, will keep better returns.

But in the medium term, Morgan Stanley Fund Management remains mostly bullish about areas that are developing sustainedly, such as the semiconductor and war industries.

Editors: Zhang Yushuo, Futura Costaglione