3 months, 354 companies, 1,295 A-share research visits. "Technology narrative" becomes the biggest "anchor point" for foreign investment looking at China.

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Source: China Business Journal

Chinajing Reporter Sun Ruxiang / Xia Xin, Beijing Report

Against the backdrop of intensifying global geopolitical uncertainty and continued volatility in energy prices, international financial institutions including Goldman Sachs, Morgan Stanley, UBS, Loomis, and Standard Chartered have recently issued frequent positive outlooks on the A-share market.

Foreign institutions generally believe that the “safety attributes” of Chinese assets and the “technology narrative” are becoming the two core drivers attracting global capital.

As of April 2, 2026, 354 foreign institutions have conducted 1,295 research visits to A-share listed companies in the year to date. Institutions such as BlackRock, Goldman Sachs, and UBS have all been actively involved. The research focus is concentrated on areas including hardware equipment, machinery, semiconductors, and electrical equipment, with a strong emphasis on the two core tracks of high-end manufacturing and technological innovation.

Meanwhile, in the fourth quarter of 2025, multiple companies in the high-end manufacturing and hard-tech sectors received additional QFII purchases.

In the view of foreign institutions, under the global pattern of “steady in the east, turbulent in the west,” the strategic allocation value of the A-share market is being systematically enhanced.

“Steady in the east, turbulent in the west” — China has certainty

Recently, Xing Ziqiang, Chief China Economist at Morgan Stanley, said that amid escalating global geopolitical conflicts, the Chinese economy has shown a notable degree of relative resilience.

In Xing’s view, China has strong policy stability and maintains restraint on the geopolitical front. Despite facing deflationary challenges, overall certainty remains high. The United States, by contrast, faces many uncertainties stemming from policies such as tariffs, immigration, the central bank leadership, and unilateralism. Under the “steady in the east, turbulent in the west” framework, “resilience” itself has already become a scarce asset. Big global money—such as sovereign wealth funds and pension funds—will consider reducing excessive concentration in dollar assets, and China is expected to gradually benefit from this process.

“Before and around this year’s Spring Festival, we have already advised investors to put their funds mainly into the A-share market.” Wang Ying, Morgan Stanley China’s Chief Equity Strategist, expects that in 2026, the A-share market will move from “rising” into a “steady” market phase, with further potential to attract foreign capital inflows.

“Against the backdrop of geopolitical conflicts and a global energy crisis, China’s market policies will be tested and validated in terms of continuity and effectiveness, cyclical independence, and its global leading position in the high-end industrial chain. Over the long term, its investment status will continue to improve.” Wang Ying believes that the A-share market is the core direction for positioning China assets right now. It has three advantages: first, it performs more resiliently under geopolitical volatility, with adjustment magnitude smaller than in other Asian markets; second, the “national team” has ample ammunition and can effectively smooth out market fluctuations; third, investment opportunities related to energy-efficiency and safety—such as machinery manufacturing tied to raw materials, industrial products, semiconductors, energy, and also power generation, energy storage, and transmission—are more concentrated in the A-share market.

Liu Song, Chairman of Loomis Fund Management (China) Co., Ltd., believes that amid increasing global uncertainty and the emergence of geopolitical conflicts, the safety and attractiveness of Chinese assets are reflected in their strong economic resilience and “safe-haven” attributes. From the perspective of “viewing China assets through global industrial logic,” the independence of Chinese assets is no longer isolated; rather, it exists as an indispensable “stabilizer” within global industrial chains.

“We continue to increase our allocation to China’s core logic, because it demonstrates a unique kind of ‘certainty’ in a world of high volatility. Compared with many economies still dealing with the pressure of high inflation, China currently has both economic resilience and a mild, controllable inflation level. The stability of these fundamentals is itself a scarce advantage.” Liu Song emphasized.

Liu Jinjin, Goldman Sachs’ Chief China Equity Strategy Analyst, said that compared with some economies that are more directly hit by energy price shocks, China’s market has certain advantages in terms of industrial structure, policy room, and economic resilience, which still gives it allocation value in a complex external environment. At the current stage, the attractiveness of Chinese equities in global asset allocation is trending upward.

Based on a comprehensive judgment of fundamentals, valuation levels, and the direction of capital flows, Goldman Sachs continues to maintain its “overweight” recommendation for the Chinese stock market, covering both A-shares and Hong Kong-listed Chinese stocks. Goldman Sachs believes Chinese stocks’ valuations are still in an attractive range and offer a relatively good price-to-value advantage among global equity assets.

In addition, Goldman Sachs believes that as global capital gradually re-evaluates emerging-market allocations, China’s market has room for marginal improvement in its weight within global investment portfolios.

The technology narrative brings valuation re-rating potential

Regarding valuation reconstruction potential under China’s technology narrative, foreign institutions continue to show optimism.

“AI is still the most discussed investment theme among Chinese stocks. China’s AI is not a bubble. Our estimate is that the potential economic benefits brought by AI through efficiency gains and new profit creation may be 50%—100% higher than the level currently reflected by AI stock prices.” Liu Jinjin said. China has competitive and comparative advantages in the global AI supply chain, especially in infrastructure, power, and semiconductors.

Earlier, the UBS Wealth Management Investment Director Office also said that the market correction may have already gone too far, and investors have the opportunity to increase positions in high-quality Chinese AI sector stocks at lower valuations.

The office believes that China’s internet industry’s 12-month forward price-to-earnings ratio is currently around 13 times, which is already close to the level before DeepSeek was released. Current valuations have not yet fully reflected the gains brought by AI investment and monetization over the past year. It expects MSCI China’s index EPS (earnings per share) growth this year to be about 13%, with the technology sector’s earnings growth potentially reaching 20%—25%. At the same time, the policy level continues to support AI development and technological innovation, and as fundamentals keep improving, earnings, valuations, and positions are also expected to gradually rebound.

“We continue to like the valuation re-rating potential brought by China’s technology innovation closely tied to the development of artificial intelligence. And we expect that under the domestic GDP growth target of 4.5%—5.0% in April 2026, policy support will continue.” Standard Chartered said in its April global markets outlook, stating it will maintain an overweight position in China. It believes that alongside the development of artificial intelligence, the valuation re-rating potential in China’s technology innovation industries is worth关注. A series of supportive policies will also help improve the asset return rates of state-owned enterprises and encourage companies to increase cash dividends or conduct share buybacks.

Manulife Asset Management (shown as “Macro” in Chinese; but the statement says explicitly “外资公募宏利基金”) said that although technology-related industries saw a sharp rise throughout 2025, they still have ongoing investment opportunities. On the one hand, as the expansion of advanced logic chips and memory chips continues, domestic foundries will maintain high-intensity capital expenditures during the “15th Five-Year Plan/2026-2030” period, driving continued growth in orders for semiconductor equipment and materials companies and providing high visibility into performance. On the other hand, AI models are still accelerating iteration. Whether domestic or overseas internet giants, they keep making high levels of investment, so the AI compute power industrial chain is still expected to display good investment value.

“In 2025, global capital was highly concentrated in U.S. AI compute power and the model layer, which caused foreign allocation to China’s AI ecosystem to be at a historical low. However, in 2026, with China’s rapid breakthroughs in the field of ‘technological self-reliance,’ this ‘allocation vacuum’ is triggering strong rebound demand.” Liu Song said.

Positive shift — global investors’ interest warms up

Jiang Xianwei, Senior Global Markets Strategist at Morgan Asset Management China, said that based on relatively higher economic growth rates, clear policy direction, continued improving macro data performance, and enterprise earnings recovery driven by industrial structural transformation and upgrading, it remains optimistic about this year’s A-share market outlook.

“As global investors’ sentiment improves, international capital’s attention to and willingness to allocate to China’s equity market have clearly rebounded, and the level of interest may have already risen to its highest point in recent years.” Liu Jinjin said. The latest customer research results show that only about 10% of surveyed investors believe China’s stock market is “not investable,” down significantly from about 40% two years ago, reflecting a positive shift in overseas investors’ overall view of Chinese assets.

Liu Jinjin said that over the past two years, global investors’ cautious sentiment toward the China market has gradually eased. Valuation appeal, improved policy expectations, and demand for diversification of asset allocation have become key factors driving the rebound in investment interest. As new uncertainties appear in the global macro environment, China’s equities are being re-recognized in strategic terms within international asset allocation frameworks.

In fact, as of April 2, 2026, 354 foreign institutions have conducted 1,295 research visits to A-share listed companies in the year to date. Institutions such as BlackRock, Goldman Sachs, and UBS have all been actively involved. The research focus is concentrated on areas including hardware equipment, machinery, semiconductors, and electrical equipment, with a strong emphasis on the two core tracks of high-end manufacturing and technological innovation.

High-end manufacturing and technological innovation are also key focus areas for QFII additions in the fourth quarter of 2025. Industry insiders summarize that stocks that received increased QFII purchases generally show three characteristics: first, most come from high-end manufacturing and hard-tech sectors, such as semiconductors and electrical equipment, aligning with industrial upgrading and domestically driven self-reliance; second, many are sub-sector leaders with technical barriers and pricing power, with higher earnings certainty; third, valuations are mostly at historical or industry mid-to-low levels, providing sufficient margin of safety.

（Editor: Xia Xin / Review: Li Huimin / Proofread: Yan Yuxia）

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