Investors held a combined 27.5% of Midea Group via the Qualified Foreign Institutional Investors (QFII) RMB Qualified Foreign Institutional Investors (RQFII) schemes and the Stock Connect linking mainland and Hong Kong, according to the Shenzhen Stock Exchange.

The heavy buying into the company came as foreign money continued to flow into China's $8.1 trillion A-share market.

As of Wednesday, foreign investors had purchased about 300 billion yuan ($42.62 billion) worth of A-shares via the Stock Connect this year, and they had been net buyers via the scheme for the 20th straight session, according to HKEX.

Foreign investors' overweighting of some Chinese stocks, including Midea Group, reflects their belief that such stocks have good growth outlook and low valuations, said Zhang Gang, an analyst with China Central Securities.

There could be more Chinese firms in which foreign holdings would be near the 30% cap, indicating the increasing attractiveness of China's onshore equities market, Zhang added.

Shares in Midea have gained more than 50% this year, versus a 17% rise for the benchmark Shanghai index, as international investors chase the consumer bellwether, betting Beijing would roll out more measures to stimulate domestic consumption to shore up the cooling economy.

Offshore buying has also been stoked by the addition of Chinese shares to major global investment indexes such as those compiled by MSCI.

On Thursday, Midea Group rose as much as 1.1% in early morning trade before paring gains.

However, the ownership limit could become a bigger headache for overseas investors buying Chinese stocks, especially small- and mid-caps, as Beijing steps up efforts to attract foreign capital to counter the impact of the Sino-U.S. trade war.

Under Chinese rules, combined foreign ownership in a China-listed company must not exceed 30 percent, while the ownership cap for an individual overseas investor is 10 percent.

Global index provider MSCI in March removed Han's Laser Technology from its China indexes after Chinese regulators blocked foreign purchases of shares in the Shenzhen-based company as offshore ownership neared the 30 percent limit.

(Reporting by Luoyan Liu and John Ruwitch; Editing by Kim Coghill)