CHINA’S deepening expertise in these technologies has fueled growing optimism among international financial institutions. Many are turning bullish on Chinese assets, channeling fresh capital into the country’s equity markets amid strong innovation and tech momentum. Global investors’ interest in Chinese assets will continue to support the strong performance of these assets, including Hong Kong and Chinese mainland equities in the second half of this year, Chen Ge, co-head of the global investment banking department at UBS Securities, said during a group interview in Beijing on Thursday. According to UBS Securities’ research, active global funds’ allocations to Chinese equities have rebounded noticeably since the fourth quarter of 2024, rising from a trough of about 5 percent of portfolios to approximately 7 percent recently, Chen noted. As of the end of May, offshore investors held more than 4 trillion yuan ($591.22 billion) worth of A-share free-float market capitalization. In the first quarter, total Qualified Foreign Institutional Investors (QFII) holdings reached 13.86 billion shares, up 27.02 percent quarter on quarter. Underpinning rising foreign allocations is also a structural shift within China’s capital markets. According to Shanghai-based financial data provider Wind Information, as of June 9, the number of A-share companies with a market capitalization above 100 billion yuan ($14.77 billion) reached 204 billion yuan. Notably, these newly added mega-cap firms are concentrated in high-tech sectors such as semiconductors, the new energy supply chain, communications equipment and aerospace. This is also reflected in reports of some overseas financial institutions. “We are starting to see better value in Chinese hardware firms, which have risen as a dominant force in the physical AI trade. Innovation is thriving, supported by rising R&D investment and China’s vast pool of talent,” Matthew Quaife, Fidelity International’s global multi-asset head, said. Chinese giants, such as industrial robot makers and semiconductor manufacturers, have increasingly gained local market share from foreign rivals, helped by the government’s push for self-reliance in technology and supply chains, Quaife noted. Source of certainty Beyond strong industrial fundamentals, China’s steady financial opening and improving market environment continue to stand out to global investors amid widespread geo-economic turbulence, analysts said. “Chinese equities offer a distinct source of certainty,” ICBC International analysts including chief economist Cheng Shi said in a note sent to the Global Times on Monday. China’s opening up in the financial sector has been making continuous progress. On June 5, the China Securities Regulatory Commission released its latest list of QFII and Renminbi Qualified Foreign Institutional Investors (RQFII), showing that seven institutions were granted QFII/RQFII status in May, the Securities Daily reported. Other policy supports have also boosted the appeal of Chinese assets, analysts noted. “China’s capital markets have prioritized funding for growth-oriented future industries and emerging sectors, underscoring how capital markets bolster the real economy,” Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Monday. With leading technology firms accelerating their initial public offering filings, China’s capital markets are poised for a mini-wave of hard-tech listings, which will markedly enhance the quality of listed assets, prompting international long-term capital to reassess China’s innovation value, Yang said. “The continuous inflow of foreign capital underscores that amid geopolitical tension and trade frictions, China’s industrial resilience, energy cost advantages and breakthroughs driven by new quality productive forces have elevated it from being an ‘option’ to a ‘necessity’ in global asset allocations,” Tian Lihui, dean of the Institute of Financial Development at Nankai University, told the Global Times.
