Background
For years, China’s stock markets were viewed with skepticism by global investors, particularly after trade tensions with the U.S. and regulatory crackdowns made them seem “uninvestable.”
What Happened
Foreign investors are now making a comeback. Progress in artificial intelligence, semiconductors, and biotech, along with monetary easing at home and a tariff truce with the U.S., has helped boost confidence. The Shanghai Composite recently touched a decade high, while Hong Kong stocks hit a four-year high. According to Reuters, August marked the largest monthly buying of Chinese equities by global hedge funds in six months.
Why It Matters
China’s $19 trillion stock market could once again become a major destination for global capital. A stronger flow of foreign money would deepen liquidity and potentially sustain the rally, though concerns about China’s sluggish broader economy and weak foreign direct investment remain.
Stakeholder Reactions
Allianz Global Investors said China is now being seen as a “standalone asset class” investors cannot ignore.
Polar Capital increased its China allocation above 30%, citing breakthroughs in AI models like DeepSeek.
Analysts warn, however, that unless the AI boom spreads to the wider economy, momentum may be short-lived.
What’s Next
More non-Asia investors are planning trips to China and Hong Kong later this year to explore opportunities. Still, sustained inflows will depend on whether economic fundamentals improve and deflationary pressures ease, Reuters reported.