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This week's $6.1 billion directed into China funds was the
second largest ever, BofA added, citing data from EPFR global.
Chinese funds also led equity inflows, receiving inflows equal
to 2.5% of assets under management, compared to just 0.1%
globally, the bank said.
Shares in the blue-chip CSI300 index have risen to levels not
seen since the 2015 bubble, supported by hopes of an economic
recovery, a conducive regulatory environment and retail investor
enthusiasm.
Chinese state-run media, previously encouraging the rally,
warned on Thursday that investors should respect the market,
manage risks and pursue rational investments, after regulators
published a list of illegal margin lending platforms in an
apparent move to calm markets.
That paused the stock rally on Friday, the session ending lower
for the first time since June 29, after the country's state
funds announced stake cuts in companies.
"It's not the first time we've seen moves of this magnitude and
it doesn't typically end well," said Craig Erlam, senior market
analyst at OANDA.
"If we continue to see these efforts to encourage participation,
I would be surprised if we don't continue to see inflows. People
don't like to miss out on rallies like these, which is one of
the things that makes them so dangerous."
BofA's report also showed weekly flows of $29.4 billion into
cash funds, $17.8 billion into bonds funds, $6.2 billion into
equities funds and $2.4 billion into gold funds. Emerging
markets bonds saw their first inflow in four weeks.
The bank sees "cross asset sentiment moving quickly away from
'extreme bearish'", citing its Bull & Bear indicator, that
tracks positioning.
(Reporting by Julien Ponthus and Yoruk Bahceli; Editing by
Andrew Heavens)
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