(Yicai Global) Aug. 31 -- Switzerland’s UBS Group and Singaporean sovereign wealth fund GIC Private were among the qualified foreign institutional investors to invest heavily in China-listed stocks in the second quarter as the mainland capital markets continued to outperform the rest of the world.

The names of 45 QFIIs have appeared on the top 10 shareholder lists of nearly 200 Chinese stocks in the three months ended June 30. Technology, medicine, machinery, equipment and building materials were their favorite picks.

Jiangsu Hengrui Medicine, WuXi AppTec and Aier Eye Hospital Group were the top three pharmaceutical stocks with CNY4.8 billion (USD703.3 million), CNY6.2 billion and CNY4.5 billion of foreign funds respectively.

GIC and UBS pumped CNY3 billion (USD438 million) into medical device firm WuXi AppTec, raising their stakes by a combined 31 million shares. The investment did not go unrewarded. The Shanghai-based company’s stock price jumped 68 percent from the beginning of April to the end of June.

Eyecare hospital chain Aier Eye saw its share price rise nearly 70 percent in the second quarter, helped by an increase in holdings by private equity firms Hillhouse Capital Group and Fullerton Fund Management.

Han's Laser Technology Industry Group, Hangzhou Hikvision Digital Technology and Venustech Group were the top three tech stocks with CNY2.2 billion, CNY1.4 billion and CNY1.3 billion respectively of foreign holdings.

The Central Bank of Norway has reaped benefits from its new buys in delivery services firm SF Holding and Beijing New Building Materials, whose stocks have risen by 58.7 percent and 46.6 percent respectively since the beginning of July.

“The current valuation of the CSI 300 Index, which measures the performance of the top 300 stocks traded on the Shanghai and Shenzhen stock exchanges, is slightly higher than its 10-year average,” Gao Ting, chief China-listed stock strategist of Nomura Orient International Securities, told Yicai Global. Industries with relatively low valuations, stable performance and that are more sensitive to government policies deserve attention.

The insurance sector has benefited from rising revenue and increased market penetration, giving reason for optimism in the medium and long term, said Xu Tao, fund manager at APS Asset Management. The low valuation of the real estate industry also gives leading real estate developers with good sales performance room for growth. Economic fundamentals and the rising non-performing ratios within the banking sector pose challenges, he added.

After the start of the third quarter, many foreign investment institutions began to be more cautious about the tech sector and are instead turning towards personal health care, small home appliances, consumption, new energy, retail and duty-free and the insurance-based financial sectors as well as leading real estate companies.

Editors: Tang Shihua, Kim Taylor