(Yicai) Sept. 26 -- Several foreign institutions believe that a good moment to buy Chinese stocks has arrived after recent support policies positively impacted the local economy and capital market, according to a report.

"Now might be a good time to reinvest in the Chinese stock market," Shanghai Securities News reported today, citing David Chao, global market strategist Asia Pacific at Invesco. "Faced with more support measures from the government, investors can consider allocating Chinese stocks at the current level."

China's financial regulatory authorities have released a series of policies that have ignited investor sentiment. On Sept. 24, the People's Bank of China announced several measures, including imminent reserve requirement ratio and interest rate cuts, a reduction in existing mortgage rates, and the creation of new policy tools to support the development of the stock market.

The positive impact of these policy measures is not limited to providing liquidity support to the real estate and stock markets but is also conducive to reversing the declining trend of China's money velocity, said Zhang Xiaomu, equity fund manager at Fidelity Investments' Asset Management division.

If the policies related to the stock market are smoothly implemented, they can revitalize some idle funds through the stock market as a medium, thereby improving China's effective money velocity, Zhang noted.

The policy released by China's central bank exceeded market expectations, said Zhu Haibin, managing director, chief China economist, and head of China economic research at J.P. Morgan. It is the most comprehensive easing policy since 2015 and is clearly aimed at restoring market confidence, he added.

On the day the PBOC released the policy, overseas hedge funds bought a lot of consumer sector and high-dividend stocks listed on mainland bourses, according to a foreign investment banking professional. An insider from Rayliant Global Advisors noted that a mainland exchange-traded fund listed in New York saw a surge in capital inflows.

Market sentiment is expected to gather in the short term, anticipating a rebound in onshore and offshore Chinese markets, with mainland shares likely outperforming the overall emerging markets, according to Wang Ying, chief China equity strategist at Morgan Stanley.

The Chinese government may need to introduce more stimulus measures focused on supply and demand to change market sentiment and boost the economy, Chao noted.

Editor: Martin Kadiev