Goldman Sachs' Liu Jingjin: International investors' interest in Chinese stocks may have climbed to its highest level in recent years

Goldman Sachs Chief China Equity Strategist Liu Jinjin stated on March 24 that international investors’ interest in Chinese stocks may have risen to a recent high, with only about 10% of surveyed clients considering the Chinese stock market “uninvestable,” a significant improvement from about 40% two years ago. Amid increasing geopolitical tensions in the Middle East and soaring energy prices, Liu Jinjin said Goldman Sachs maintains a high allocation recommendation for Chinese stocks (A-shares and Hong Kong stocks) and believes that in the short term, the Sharpe ratio from A-shares is higher.

“Our conversations with U.S. investors also confirm this. They are eager to discuss topics such as AI, the implementation of ‘anti-involution’ policies, the trend of Chinese companies going global, and the potential rebound of consumer-related stocks, along with their investment implications.” Liu Jinjin believes that part of the reason U.S. investors are rekindling interest in the Chinese market is due to the need for diversification outside U.S. assets, given the potential further depreciation of the dollar, high uncertainty in U.S. policies, and elevated valuations of U.S. stocks.

Liu Jinjin stated that currently, there is a significant gap between overseas investors’ interest in Chinese stocks and their actual allocations, which still has room for improvement. Data on actual holdings show that international investors remain cautious about Chinese stocks, with hedge funds’ net exposure to China hovering around cyclical midpoints. Long-term asset management firms, especially sovereign wealth funds and pension funds from emerging markets and Belt and Road countries, have shown strong interest in China’s stock market. For example, during the recovery of the Hong Kong IPO market, foreign cornerstone investors’ participation rate reached a cyclical high of 25%.

“From the perspective of the impact of oil supply shocks on regional economies’ real GDP growth and inflation rates, China is less sensitive to oil price shocks than other emerging Asian economies,” Liu Jinjin said. Although China is a net importer of oil and natural gas, its actual exposure to disruptions in the Strait of Hormuz is less than what overall import dependence suggests. Additionally, China’s energy consumption structure relies less on oil and natural gas compared to other major economies, further weakening the transmission of domestic inflation.

Liu Jinjin noted that AI remains the most discussed theme in Chinese stock investments. China is an indispensable part of the global AI landscape, accounting for 10% of global AI-related market value and 16% of revenue. However, global mutual funds are significantly underallocated to Chinese AI stocks; as of January 2026, Chinese AI stocks only account for 1.2% of their global technology stock allocations. He believes China has competitive and comparative advantages in the global AI supply chain, especially in infrastructure, electricity, and semiconductors. “Chinese AI is not a bubble. We estimate that the potential economic benefits from AI, through efficiency improvements and new profit creation, could be 50% to 100% higher than what current AI stock prices reflect.” He continues to favor companies that highly value and are committed to delivering shareholder returns, expecting that cash returns of Chinese listed companies may reach new highs by 2026 (about RMB 4 trillion).

(Edited by: Wang Zhiqiang HF013)

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