Foreign investment is flocking to a series of China-focused ETF funds. In the past few weeks, some ETF, which focuses on the Chinese market, has seen a surge in call option activity.

The $7.3 billion iShares MSCI china ETF rose about 32% in November, with inflows of about $567 million. The fund tracks the MSCI China Index, which measures the performance of major Chinese companies.

The $5.8 billion KraneShares CSI china internet fund has also risen 48 per cent in the past month, with subscriptions rising to their highest level since June. Although there has not been a large inflow of money into the ETF. But call options have risen to their highest level since June.

Dave Lutz, director of ETF at JonesTrading, said:

The "real fulcrum" of global markets is Chinese policy, not the Fed. KraneShares CSI has always been the main tool used by investors to short the Chinese market, but now, although there has not been a large influx of money, it has changed significantly.

The $5 billion iShares China Large-Cap ETF rose 24 per cent in November, with a daily net inflow of $105 million, the highest since March, while the $2 billion Chinese A-share ETF of Xtrackers Harvest CSI rose 17 per cent.

ETF analyst Todd Rosenbluth said:

Investors are optimistic about China's ongoing opening up and economic growth that will return to past levels in 2023, providing a good opportunity to focus on China's ETF before the economy improves.

Wall Street banks have taken turns to sing more about the Chinese stock market, and the one who recently released an optimistic forecast is JPMorgan Chase & Co.

Tactically, the reopening of Asia, led by China, is long overdue and is likely to receive further policy support, JPMorgan Chase & Co's strategists wrote in their recently released global stock market outlook for 2023.

These strategists expect the MSCI china index to rise 17 per cent between now and the end of 2023, driven by a 14 per cent increase in earnings per share and a target price-to-earnings ratio of 10.5 times.

Wall Street mentioned earlier that the Chinese stock market staged an epic rebound in November. As recently as November, comments from a number of institutions showed that Wall Street was forming a consensus bullish on the Chinese stock market.

Morgan Stanley, who has always been cautious, raised his target price for the Chinese stock market, and the MSCI China index is expected to rise 14% by the end of next year. Jonathan Garner, the bank's chief Asia and emerging market equity strategist, said that as the good news continues, the Chinese market will perform better and the bull market is likely to last for several quarters.

Strategists such as Citigroup's Robert Buckland have upgraded Hong Kong stocks to overweight, and changes in epidemic prevention and real estate policies are expected to boost corporate earnings, arguing that the current series of domestic policies in China will help support investor sentiment. Even if other major economies are slowing sharply, China is likely to rely on internal drivers to achieve an attractive recovery.

Last week, Michael Hartnett, chief investment strategist at Bank of America Corporation, mentioned long Chinese stocks when he released the preferred recommended trade for 2023. BofA's strategy team believes that domestic stocks are bound to rise after China relaxes its epidemic prevention because residents have excess savings. The report points out that the lifting of epidemic prevention measures in other countries, such as the United States, has boosted their stock markets.

In November, Goldman Sachs Group reaffirmed his confidence in the Chinese stock market and maintained his overrated rating on the MSCI China Index. The MSCI China Index and the CSI 300 Index are expected to return as high as 16% in the next 12 months, and 19% and 21% if the exchange rate factor is taken into account. Goldman Sachs Group also raised China's Hong Kong shares from low to even.