From "not investable" to a flow of real gold and silver! Foreign capital sets off a bullish wave around the Chinese stock market.

Three years ago, after foreign capital made a significant retreat and declared the Chinese market "uninvestable," foreign investors are now returning in droves to the Chinese stock market, trying to seize the unprecedented investment opportunities in Chinese technology stocks being driven by artificial intelligence and companies like Siasun Robot & Automation and innovative pharmaceuticals. This comes as a series of aggressive measures by Trump have caused the "American exceptionalism" to gradually crumble, leading to a growing demand for diversification outside of American assets. This year, China has seen breakthrough progress in areas such as the adoption and penetration of artificial intelligence, semiconductor and innovative drug research, which has led foreign investors, including Wall Street giants, to increasingly believe that the trade war between China and the US and Washington's technology export ban have not stifled the innovation and resilient economic expansion of the world's second largest economy. The enthusiasm for Chinese technology stocks driven by artificial intelligence and Siasun Robot & Automation, the temporary ceasefire in the US-China trade battle, and the further boost in domestic monetary policy have fueled a fervent bullish sentiment among global funds towards the Chinese stock market (including Hong Kong and A-shares). As a result, the Shanghai Composite Index is approaching 3900 points, reaching its highest level in a decade last week, while the benchmark Hang Seng Index in Hong Kong has reached its highest level in four years. The voice to "go long on China" echoes throughout Wall Street The dramatic change in sentiment among foreign investors - from disbelief in the Chinese market three years ago to a "cautious" stance at the end of last year and now to an increasingly bullish enthusiasm - may provide additional momentum to the ongoing bull market rally primarily driven by domestic funds such as private equity firms. Brett Barna, former top hedge fund manager and current manager of two single-family offices based in New York, stated that the "early bird foreign capital" seeking to diversify its risk from crowded and historically high-valued US stock assets has returned to China, attracted by the booming Chinese market. "The Chinese market is interesting because it has very low correlation with other regions of the world, at least in the onshore A-share market," Barna said in a media interview. He also added that he plans to build an investment platform to facilitate easier access for American and European capital to enter the Chinese capital market. A recent survey report from Morgan Stanley shows that US investors have shown significantly higher interest in Chinese stocks than in the period from 2021 to 2024. Their main focus is on AI humanoid Siasun Robot & Automation, biotechnology, and innovative consumer sectors, although there are concerns, and the firm also cautions investors to keep an eye on certain indicators. The firm emphasized that US investors' positive interest in Chinese stocks is the highest since the onset of the COVID-19 pandemic: roadshows spanned the East and West coasts. Whether at the index level or focusing on specific themes and structural opportunities, the attention of US investors on the Chinese market has pleasantly surprised them. Morgan Stanley noted that over 90% of US investors they had met with explicitly expressed their willingness to increase their exposure to China, the highest level since the beginning of 2021 when the Chinese stock market peaked. The bank pointed out that multiple factors were pushing up investment willingness, and since the beginning of the year, US investors have agreed with the firm's constructive view on China, recommending an increase in A-shares since June and seeing positive prospects in AI, Siasun Robot & Automation, and semiconductor thematic investment opportunities. The report from Morgan Stanley also stated that US investors' interest in the Chinese market has surpassed sectors such as ADRs and internet sectors to extend to the A-share market. Historically, the firm observed that US investors concentrated more on Chinese ADRs due to trading time and time zone restrictions. However, several themes and sectors, including AI, semiconductor, humanoid Siasun Robot & Automation, and new consumption, are primarily traded on the Hong Kong Exchange and the A-share market. The firm noted that the quantitative and macro funds they have recently interacted with have mentioned that when time and resources are insufficient to support a "bottom-up" stock selection process, participating in the Chinese market through A-share ETFs and index futures products is the fastest and most direct method. Hedge funds globally ramp up investments in China Data on fund distribution and fund flows, especially in Chinese stock market-related ETFs trading on public exchanges in Western stock markets such as the US, have shown significant expansion recently (such as the hot Chinese internet ETF: KWEB in the US stock market), indicating the increasing enthusiasm of foreign investors for the $19 trillion Chinese stock market, including both Hong Kong and A-shares. A research report from Morgan Stanley shows that in August, global hedge funds' net buying scale of Chinese stock assets reached the highest level in six months, although specific numbers were not disclosed. Data from another financial giant on Wall Street, Goldman Sachs, showed that in August, the net buying scale of global hedge funds in the Chinese stock market hit a new high since September 2024, with hedge funds increasing their positions in Chinese stocks by 76 basis points to a two-year high. Statistics from Morningstar, one of the world's leading rating agencies, show that the number of new emerging market equity funds excluding China dropped to 8 in 2025, compared to 21 in 2024 and 16 in 2023. This suggests a significant decrease in demand for emerging market investments without China this year. "A year ago, investors even wanted to remove China from the emerging market index. Now, China is seen as an independent asset class that they cannot ignore," said Zheng Yucheng, Chief Investment Officer of the China Fund Business Unit at Allianz Global Investors, in an interview. Jerry Wu, a fund manager at Polar Capital, a London-based asset management company with assets under management totaling up to $200 billion, stated that the company changed its investment stance on China from "underweight" to "actively overweight" at the end of 2024 and further increased the allocation of Chinese assets in its emerging market portfolio from the low 20% range to over 30% this year. He emphasized that at the annual conference held in February this year, the China-themed session was fully packed, attracting 55 large clients, more than double the number compared to 2023. The surge of Chinese technology stocks is unstoppable Jerry Wu also pointed out in the interview that the emergence of DeepSeek earlier this year has triggered a trend of "revaluation" of Chinese technology assets in the market. DeepSeek is an efficient and low-cost AI large model that competes with ChatGPT developed by OpenAI while being created by a Chinese AI startup. Jerry Wu stated that the surge in Chinese AI investments triggered by AI, and the "Chinese technology stock investment frenzy" covering biotechnology, Siasun Robot & Automation, and semiconductor sectors, is boosting momentum in the Chinese market. Benjamin Low, Senior Investment Director at international investment institution Cambridge Associates, said that his team has received over 30 client inquiries about finding Chinese funds this year, in stark contrast to the trough of 2023 when there were almost no requests focused on the Chinese market. He mentioned that many non-Asian investment institutions plan to visit China later this year to explore investment opportunities, some of whom are visiting China for the first time since the COVID-19 pandemic. Nomura, a major international financial powerhouse from Japan, recently raised its target levels for the MSCI Asia Pacific ex-Japan Index and the MSCI China Index, stating that it maintains a "strategic overweight" stance on Chinese stocks, especially favoring technology stocks related to semiconductors and artificial intelligence. Driven by the explosive demand for global AI infrastructure, the computing infrastructure sector in the A-share market and the technology stocks related to the "domestic chip substitution" under the backdrop of Sino-US competition have become market focal points, with several leading AI computing and chip stocks hitting new highs in stock prices, with performance also increasing significantly. With Chinese internet and cloud computing giants such as Alibaba announcing performance exceeding market expectations and revealing ambitious "super AI blueprints," further igniting the tech stock investment frenzy in the Chinese stock market, the strong rally of Chinese technology stocks favored by global funds this year has continued. This super wave of artificial intelligence is comparable to the 2021 tech stock "frenzy" in the US stock market. Following the announcement of its performance, Alibaba's stock price soared over 17% on the day of its Hong Kong performance disclosure, with market value skyrocketing over $50 billion. Huangpu River, which focuses on the ASIC route, can be said to be the hottest stock in the current Chinese stock market, with a gain of up to 110% this year. Goldman Sachs raised its target price for the "Chinese AI chip leader" and leading player in the "domestic chip substitution" Huangpu River just a week after upgrading it. In its latest report released on September 1st, Goldman Sachs raised the 12-month target price for Huangpu River from RMB 1835 to RMB 2104, a 14.7% increase, while maintaining a "buy" rating. The new target price implies a 41% upside from the closing price on August 29. Verisilicon Microelectronics (Shanghai) Co., Ltd., which focuses on chip IP, has also received a bullish outlook from Goldman Sachs, with the target price for the next 12 months raised significantly from RMB 193 to RMB 220, maintaining a "buy" rating, reflecting its strong growth momentum driven by AI orders, with a potential upside of over 20% from the current stock price. Goldman Sachs also raised its profit forecast for Verisilicon Microelectronics (Shanghai) Co., Ltd. for the years 2027 to 2030. At the index level, Goldman Sachs predicts the potential upside of core Chinese assets such as Alibaba, Tencent, Kweichow Moutai, and China Yangtze Power in the MSCI China Index to be up to 10%, maintaining a target point of 90 points; the investment return potential of the Shanghai and Shenzhen 300 Index, which has experienced a significant increase, is estimated to be around 10%, with a target point of 4900, significantly up from the previous 4500. Goldman Sachs recently stated that a "significant driver" of the stock market rally is still the group of retail investors in China with excess savings, and from a longer-term perspective, net long positions in the Chinese stock market are still at relatively low levels, so the undervaluation of the Chinese stock market and the increasingly active trading volume are worth paying attention to.