Hong Kong\u00a0– Global money managers are venturing back into China after years of aversion, piqued by a world-beating stock rally and the country\u2019s advances in high-tech industries.<\/p>\n
Goldman Sachs Group said global hedge funds in August were the most active in onshore equities in recent years \u2013 a stark contrast to 2021, when some clients had deemed the market \u201cuninvestable\u201d.<\/p>\n
Pacific Investment Management Co (Pimco) said investors have pivoted away from worrying about risks to missing out. Official data show foreign inflows rising across asset classes, a coordinated advance that\u2019s only happened in three of the past 10 years.<\/p>\n
Taken together, these are signs of a turnaround for a market that had fallen out of favour with global investors amid prolonged regulatory crackdowns and a spiralling property crisis. The US$2.7 trillion (S$3.5 trillion) equity China rally in 2025 has proven too compelling to ignore, and global funds\u2019 still-underweight positioning suggests ample room to build exposure.\u00a0<\/p>\n
It\u2019s a far cry from the harrowing years following the 2021 peak, when some money managers said China is just not worth the risk. The narrative has now changed to one of confidence, spurred by its artificial intelligence prowess and economic resilience in the face of US restrictions. Stronger inflows could buttress the yuan and aid President Xi Jinping\u2019s ambition to elevate the currency\u2019s role in global finance.\u00a0<\/p>\n
Timing has also worked in China\u2019s favour. US President Donald Trump\u2019s confrontational trade policies, the Federal Reserve\u2019s rate-cut cycle and a ballooning US budget deficit have encouraged investors to seek alternatives to US dollar assets, prompting a fresh look at the vast Chinese market.\u00a0<\/p>\n
As risk appetite continues to improve and the US dollar weakens, markets with compelling valuation and low global fund positioning \u2013 such as China \u2013 stand to benefit, said Mr Sung Chang Hwan, a multi-asset portfolio manager with Invesco\u2019s investment solutions team. Mr Sung said his fund has been increasing allocation in Chinese equities.\u00a0<\/p>\n
In the first half of 2025, foreigners boosted their holdings of onshore stocks, bonds, loans and deposits \u2013 a simultaneous increase for the first time since 2021. Net foreign inflows to June have already surpassed the 2024 annual tally by about 60 per cent, according to the latest data from the People\u2019s Bank of China (PBOC). <\/p>\n
The momentum has likely carried on. Foreign investors overall purchased onshore stocks and bonds on a net basis in August, Mr Li Bin, deputy head for the State Administration of Foreign Exchange, said in a briefing earlier in September.<\/p>\n
Underpinning the shift in perception is the technology sector\u2019s advance, as heavyweights including Alibaba Group Holding roll out their own AI models and chipmakers like Cambricon Technologies notch breakthroughs.<\/p>\n
\u201cGlobal investors will increase their allocations to Chinese assets in the coming years,\u201d said Mr Yerlan Syzdykov, global head of emerging markets at Amundi UK. Among the drivers will be a sense of \u201cFomo\u201d from China\u2019s strong performance and attractively priced opportunities in areas like clean-tech and AI, he said.<\/p>\n
The CSI 300 Index, a benchmark for onshore shares, has climbed 16 per cent this quarter to reach more than a three-year high. The tech-focused ChiNext Index has rallied nearly 50 per cent during the period in one of the best performances globally. Despite the advances, the two gauges are still below their 2021 highs.<\/p>\n
To some, however, the scars of China\u2019s prolonged market downturn run so deep that returning is a non-starter. A wave of regulatory crackdowns that began in 2021 \u2013 spanning sectors from tech to tutoring \u2013 sent equities into a tailspin and fuelled the \u201cuninvestable\u201d narrative.\u00a0<\/p>\n
The authorities are also keen to tame market exuberance, suggesting runaway rallies may face scrutiny. Geopolitical tensions mean America\u2019s biggest public and pension funds will continue avoiding China for political reasons.<\/p>\n
Nonetheless, growing interest in other asset classes point to a common theme: Beijing is committed to supporting the economy, and the US trade war will only embolden the country\u2019s industrial strength.<\/p>\n
Chinese tech companies sold a record amount of yuan-denominated debt in Hong Kong in 2025. The \u201cbig growth\u201d in dim sum bond markets has been supported by a broadening investor base across continents, according to Mr Eugene Ng, head of debt capital markets for greater China at HSBC Holdings.<\/p>\n
In Tencent Holdings\u2019 bond sale earlier in September, those from the Middle East invested across the curve while high-quality funds from Europe also joined, Mr Ng said. Alibaba\u2019s convertible bond sale was multiple times subscribed, with bidders including long-only investors and hedge funds.\u00a0<\/p>\n
While the revival in risk sentiment has weighed on government bonds, expectations of PBOC easing and China\u2019s low inflation are starting to lure back buyers. The conversation with clients has shifted from \u201chow to de-risk\u201d to \u201cwhat are the opportunities\u201d in China, said Mr Stephen Chang, managing director and Asia portfolio manager at Pimco. Mr Chang, who co-manages a US$572 million fund that beat 98 per cent of peers in 2025, said he may buy more Chinese government bonds after purchasing some recently.<\/p>\n
Foreigners trimmed their holdings of Chinese government bonds in August but the scale of the sell-off eased to just one-fifth of July\u2019s, official data showed.<\/p>\n
\u201cThe real interest rate of yuan bonds is still relatively high, which provides a very good channel for global investors,\u201d PBOC deputy governor Zou Lan said at a forum in Hong Kong last week.<\/p>\n
All of this has been supportive for the yuan, which rose to 7.1 against the US dollar in September \u2013 the strongest since last November.<\/p>\n
\u201cChina is not uninvestable,\u201d said Mr Thomas Fang, head of China global markets at UBS AG. \u201cThe vast gap between China\u2019s global economic footprint and the low single-digit allocation from global investors represents a significant long-term opportunity.\u201d BLOOMBERG<\/p>\n","protected":false},"excerpt":{"rendered":"Hong Kong\u00a0– Global money managers are venturing back into China after years of aversion, piqued by a world-beating…\n","protected":false},"author":2,"featured_media":43998,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[114,85,46,190],"class_list":["post-43997","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-business","tag-il","tag-israel","tag-markets"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/43997","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=43997"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/43997\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/43998"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=43997"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=43997"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=43997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}