Global Capital Repositions as China Assets Enter Revaluation Phase

As China’s economy continues to send positive signals and technology-related assets undergo a revaluation, global investors are increasingly turning their attention to the Chinese market. A shift in sentiment is becoming apparent, with foreign institutions actively deploying capital and intensifying their research into A-share listed companies.

Recent adjustments by major financial institutions such as Morgan Stanley and Deutsche Bank—raising their growth forecasts for China—reflect a broader recognition of supportive domestic policies, the resilience of services and consumption, and technological progress driving the repricing of assets. These developments are reinforcing investor confidence in both China’s macroeconomic recovery and equity market potential.

Foreign institutions are visibly increasing their allocation to Chinese assets. A quantitative private equity firm executive noted that international interest in A-share alpha has surged since the start of the year. The firm received multiple due diligence visits, with one sovereign wealth fund choosing to invest in its MSCI China index-enhanced strategy. Other European and American hedge funds have also expressed strong allocation intentions, with further collaboration anticipated.

A Shanghai-based long-biased private equity firm observed that many global asset allocators remain significantly underweight in China, which contradicts the principles of diversification. According to the firm, the 2025 revaluation of Chinese technology assets is underway, and the competitive positioning of Chinese companies on the global stage has become more prominent. The firm reported steady growth in its products for overseas clients.

Similarly, a top Beijing private equity firm indicated that while some large institutions remain cautious due to global uncertainties, there has been a notable increase in speculative capital entering China since early 2025. These institutions have also deepened their communication efforts regarding Chinese investment opportunities.

According to data from PaiPai.com, as of June 6, a total of 92 mainland private equity managers have obtained Type 9 licenses from the Hong Kong Securities and Futures Commission. This trend aligns with growing demand from overseas investors seeking to work with domestic fund managers for exposure to both A-shares and Hong Kong-listed equities.

Yao Xusheng, a wealth advisor at PaiPai.com, stated that foreign interest in Hong Kong stocks is also recovering. For instance, the JPMorgan Global China Summit in Shanghai on May 22 drew nearly 2,000 attendees—a 30% year-over-year increase—driven in part by a greater presence of European and American institutions. In late 2024, an overseas pension fund also initiated a mandate, signaling the return of long-term capital.

Deutsche Bank recently released its mid-year global economic forecast, in which Chief China Economist Xiong Yi noted expectations for continued monetary and fiscal policy support. The resilience of China’s service sector and retail indicators contributed to the upward revision of GDP forecasts for 2025. The report also emphasized China’s trade competitiveness as a potential long-term factor supporting the renminbi.

Morgan Stanley, in its own outlook, similarly raised its economic growth projections and equity index targets for China. The bank cited stabilizing corporate earnings expectations, limited foreign positioning, and RMB strength as contributing factors for the continued appreciation of China’s equity markets.

Several quantitative fund managers highlighted the breadth of China's investor base—including both institutional and retail participants—and noted an increase in trading volumes and structural investment opportunities, particularly as the economy recovers.

A quantitative private equity founder commented that while beta returns have dominated the U.S. market over the past decade, China’s alpha potential remains globally competitive. With mounting concerns around U.S. dollar assets, capital is now showing renewed interest in Chinese investments.

A fund manager at a foreign mutual fund operating in Shanghai explained that foreign investors typically compare China with the U.S., India, and Japan when allocating capital. Recent reforms in China’s asset management industry, alongside policy initiatives supporting long-term investment—such as those targeting insurance and pension funds—have contributed to rebuilding confidence among global investors.

Technological developments, such as those demonstrated by DeepSeek, are also prompting a reassessment of China’s innovation capacity. Professor Chen Xin of the Shanghai University of Finance and Economics remarked that advancements in AI applications, favorable labor costs, and policy incentives are collectively enhancing the investment case for China’s technology sector.

Peter Milliken, Head of Asia-Pacific Company Research at Deutsche Bank, noted that China’s technological strength has often been underestimated. He pointed to DeepSeek’s achievements as evidence of the country’s growing intellectual property value and sector competitiveness.

Yao Cheng, Head of Research at J.P. Morgan Securities (China) Co., Ltd., stated that generative AI in China is entering a rapid development phase. He added that demand is rising across enterprises and sectors, with early signs already visible in cloud providers’ financial performance.

As asset revaluation proceeds, overseas investors are expanding their on-the-ground analysis of A-share companies.

Data from Wind shows that, between April and June 9, 411 foreign institutions conducted 2,268 research visits across 628 listed companies. Participants included major global firms such as Goldman Sachs, Fidelity, BlackRock, UBS, Allianz, and Point72.

Electrical equipment and components emerged as the most frequently analyzed industry. Inovance Technology and Huaming Equipment were visited by 180 and 110 foreign institutions respectively—ranking highest in terms of research activity.

Other frequently studied sectors included integrated circuits, pharmaceuticals, electronic components, and measurement instruments. Companies such as BeiGene, OPT, Efort Intelligent Equipment, Montage Technology, and Luxshare Precision received substantial attention.

During the same period, Point72 carried out more than 50 company visits, focusing heavily on Zhejiang China Commodities City Group, Centre Testing International, and Inovance Technology.

A private equity executive noted a resurgence of interest in Hong Kong-listed internet firms. Key companies mentioned included Alibaba, Tencent, Xiaomi, and BYD—each considered well-positioned to benefit from technological innovation and shareholder return mechanisms such as buybacks and dividends.

Foreign investors continue to prioritize sectors with growth potential. Sheng Jin, Portfolio Director at Value Partners, identified consumption, advanced manufacturing, pharmaceuticals, and technology as core areas of interest. He pointed out a growing trend in which multinational pharmaceutical companies license early-stage IP from Chinese biotech firms, marking the start of a new cycle in innovation-driven collaborations.

Shen Yufei, Chief Equity Investment Officer at BlackRock Fund, said the firm is currently emphasizing three investment themes: strong interim earnings performance; low-volatility, dividend-yielding assets amid falling capital costs; and high-growth areas such as innovative drugs and consumer goods influenced by data and events.

Yang Dong, Fund Manager for BlackRock’s Southbound Visionary Equity Fund, added that current positioning includes sectors like internet platforms integrating AI, emotionally resonant consumer brands, and pharmaceutical companies with global reach. As valuations in some of these areas approach short-term highs, the fund also plans to explore value opportunities in segments such as sportswear.