Chinese investors have been driving the market higher despite reaching new highs, according to data from the Shanghai Futures Exchange. The exchange’s open interest on the HF (Shanghai) contract has continued to rise, with a significant increase in buying activity seen in recent weeks. This is particularly noteworthy given that the index has reached an all-time high (ATH) just last week.

The surge in buying activity can be attributed to a combination of factors. Firstly, Chinese investors have been attracted to the HF contract due to its high liquidity and ease of trading. Additionally, the contract’s exposure to the Shanghai Composite Index has made it an attractive option for investors seeking to gain exposure to the Chinese market without incurring the costs associated with direct equity investment.

The recent buying activity on the HF contract can also be seen in the context of a broader trend of increased investor appetite for risk assets. With global economic growth showing signs of slowing, investors have been seeking higher-yielding assets to diversify their portfolios. The HF contract’s high liquidity and ease of trading have made it an attractive option for those seeking to gain exposure to the Chinese market without incurring the costs associated with direct equity investment.

However, it is important to note that the HF contract is not without risks. The Shanghai Composite Index has been known to experience sudden and significant price movements, which can result in substantial losses for investors who are not properly hedged. As such, it is crucial that investors conduct thorough research and due diligence before entering into any trading position on the HF contract.

While the recent surge in buying activity on the HF contract may seem counterintuitive given the index’s record highs, it is important to recognize that Chinese investors have been driving the market higher despite reaching new heights. The HF contract’s high liquidity and ease of trading have made it an attractive option for those seeking to gain exposure to the Chinese market without incurring the costs associated with direct equity investment. However, it is essential that investors conduct thorough research and due diligence before entering into any trading position on the HF contract to minimize potential risks.