3 months, 354 companies, 1,295 A-share research visits "Technology narrative" becomes the largest "anchor point" for foreign investment in China

How does AI · Technology Narrative become the core logic for foreign investment allocation in A-shares?

Reporter Sun Ruxiang, Xia Xin, Beijing

Against the backdrop of increasing global geopolitical uncertainties and persistent energy price fluctuations, international financial institutions such as Goldman Sachs, Morgan Stanley, UBS, Robeco, and Standard Chartered Bank have recently issued optimistic outlooks on the A-share market.

Most foreign institutions believe that the “safety attributes” of Chinese assets and the “technology narrative” are becoming the two main driving forces attracting global capital.

As of April 2, a total of 354 foreign institutions had conducted 1,295 research visits to listed companies in the A-share market in 2026. BlackRock, Goldman Sachs, UBS, and others actively participated. The research focused on hardware equipment, machinery, semiconductors, electrical equipment, and other fields, with a strong emphasis on high-end manufacturing and technological innovation as the two core tracks.

In the fourth quarter of 2025, several companies in high-end manufacturing and hard technology sectors received increased holdings from QFII.

From the perspective of foreign institutions, under the global pattern of “East stable, West turbulent,” the strategic allocation value of A-shares is systematically increasing.

“East stable, West turbulent” – China offers certainty

Recently, Morgan Stanley China Chief Economist Xing Ziqiang stated that amid escalating global geopolitical conflicts, China’s economy has demonstrated significant relative resilience.

In Xing Ziqiang’s view, China has strong policy stability, maintains restraint in geopolitical matters, and despite facing deflationary challenges, overall certainty remains high. Meanwhile, the U.S. faces numerous uncertainties due to tariffs, immigration policies, central bank appointments, and unilateralism. Under the “East stable, West turbulent” pattern, “stability” itself has become a scarce asset. Large global funds, such as sovereign wealth funds and pension funds, are considering reducing over-concentration in U.S. dollar assets, and China is expected to benefit gradually from this process.

“Before and after this year’s Spring Festival, we already advised investors to mainly allocate funds to the A-share market.” Morgan Stanley China Chief Equity Strategist Wang Ying predicts that in 2026, A-shares will shift from a “leap” to a “steady” trend, further attracting foreign capital inflows.

“Against the backdrop of geopolitical conflicts and the global energy crisis, China’s policy continuity, effectiveness, cycle independence, and its leading position in high-end industrial chains will be validated, with its long-term investment status continuing to rise.” Wang Ying believes that A-shares are the core direction for current Chinese asset allocation, with three advantages: first, they perform more stably under geopolitical volatility, with smaller adjustments than other Asian markets; second, the “national team” has ample ammunition to effectively smooth market fluctuations; third, investment opportunities in raw materials, industrial products, semiconductors, energy, and energy-related machinery manufacturing such as power generation, energy storage, and transmission are more concentrated in A-shares.

Liu Song, Chairman of Robeco Fund Management (China) Co., Ltd., believes that amid increasing global uncertainties and geopolitical conflicts, the safety and attractiveness of Chinese assets lie in their strong economic resilience and hedging attributes. From the perspective of “viewing Chinese assets through global industrial logic,” China’s assets are no longer isolated but serve as an indispensable “stabilizer” in the global supply chain.

“Our continued core logic for increasing our stake in the Chinese market is its unique ‘certainty’ demonstrated in a highly volatile global environment. Compared to many economies still facing high inflation pressures, China’s economy currently exhibits resilience and moderate, controllable inflation, and this fundamental stability itself is a scarce advantage.” Liu Song emphasizes.

Goldman Sachs’ Chief China Equity Strategist Liu Jinjing states that compared to some economies more directly impacted by energy prices, China’s advantages in industrial structure, policy space, and economic resilience give it value in complex external environments. At this stage, Chinese stocks are increasingly attractive in global asset allocation.

Based on comprehensive judgment of fundamentals, valuation levels, and capital flow trends, Goldman Sachs continues to recommend a “high allocation” to Chinese stocks, covering A-shares and Chinese stocks listed in Hong Kong. Goldman Sachs believes that Chinese stocks are still attractively valued and offer a relative cost-performance advantage among global equity assets.

Furthermore, Goldman Sachs believes that as global funds gradually reassess emerging market allocations, China’s market has room for marginal increase in its weight within global investment portfolios.

Technology narrative offers valuation revaluation potential

Regarding the valuation restructuring potential driven by China’s technology narrative, foreign institutions remain optimistic.

“AI remains the most discussed investment theme among Chinese stocks. China’s AI is not a bubble; the potential economic benefits from efficiency gains and new profit creation may be 50%–100% higher than what current AI stock prices reflect.” Liu Jinjing states that China has competitive and comparative advantages in the global AI supply chain, especially in infrastructure, electricity, and semiconductors.

UBS Wealth Management’s Investment Office recently indicated that market adjustments may have been excessive, and investors have opportunities to increase holdings of high-quality Chinese AI stocks at lower valuations.

The office notes that China’s internet sector’s 12-month forward P/E ratio is about 13 times, close to the level before DeepSeek’s release, and current valuations have not fully reflected the earnings and gains from AI investments over the past year. It is estimated that the MSCI China Index’s EPS (earnings per share) growth rate this year will be about 13%, with the technology sector’s profit growth expected to reach 20%–25%. Meanwhile, policy support for AI development and technological innovation continues, and as fundamentals improve, earnings, valuations, and positions are expected to gradually rebound.

“We remain optimistic about China’s technological innovation and the valuation revaluation potential driven by artificial intelligence development, and expect that under the 4.5%–5.0% GDP growth target for 2026, policy support will persist.” Standard Chartered Bank stated in its April global market outlook, maintaining an overweight position in China. It believes that with the development of AI, the valuation revaluation potential of China’s tech innovation industry is worth attention. A series of supportive policies also help improve the asset returns of state-owned enterprises and encourage companies to increase dividends or share buybacks.

Manulife Investment Management, a foreign public fund, states that although the technology-related sectors experienced significant gains throughout 2025, there are still ongoing investment opportunities. On one hand, as advanced logic chips and memory chips continue to expand production, domestic wafer fabs will maintain high capital expenditure during the “14th Five-Year Plan,” driving sustained growth in orders for semiconductor equipment and materials, with high visibility of performance. On the other hand, AI models are accelerating iteration, with both domestic and overseas internet giants maintaining high investment levels, so the chip industry chain is expected to continue showing good investment value.

“By 2025, global capital is highly concentrated in U.S. AI computing power and models, leading to a historically low allocation ratio of foreign capital to China’s AI ecosystem. However, by 2026, as China makes rapid breakthroughs in ‘technological independence,’ this ‘allocation vacuum’ is triggering strong replenishment demand,” Liu Song states.

Active shift, global investor interest warms

Jiang Xianwei, Senior Global Market Strategist at Morgan Asset Management China, states that based on relatively high economic growth, clear policy direction, sustained macroeconomic improvement, and industrial transformation-driven corporate profit recovery, the outlook for this year’s A-share market remains optimistic.

“As global investor sentiment improves, international capital’s attention and allocation willingness toward Chinese stocks have noticeably rebounded, reaching recent highs.” Liu Jinjing notes that recent client surveys show that only about 10% of respondents consider Chinese stocks “uninvestable,” a significant decline from about 40% two years ago, reflecting a positive shift in overseas investors’ views on Chinese assets.

Liu Jinjing says that over the past two years, global cautiousness toward China has gradually eased, with valuation attractiveness, policy expectations, and diversified asset allocation needs driving renewed investment interest. As the macro environment faces new uncertainties, China’s stock market is regaining strategic importance within international asset allocation frameworks.

In fact, as of April 2, a total of 354 foreign institutions had conducted 1,295 research visits to A-share listed companies in 2026. BlackRock, Goldman Sachs, UBS, and others actively participated. The research focused on hardware equipment, machinery, semiconductors, electrical equipment, and other fields, with a strong emphasis on high-end manufacturing and technological innovation as the two core tracks.

High-end manufacturing and technological innovation were also key focuses of QFII increased holdings in the fourth quarter of 2025. Industry insiders summarized that stocks receiving QFII inflows generally share three features: many come from high-end manufacturing and hard tech sectors like semiconductors and electrical equipment, aligning with industrial upgrading and indigenous development; many are leading companies with technological barriers and pricing power, with high performance certainty; valuations are often at historical or industry lows, with ample safety margins.

(Edited by Xia Xin, reviewed by Li Huimin, proofread by Yan Yuxia)