BlackRock's Strategic Build-Up in Aluminum Corporation of China: A Catalyst for H-Share Exposure?

Institutional investors have long viewed China's industrials sector as a barometer of macroeconomic resilience and structural transformation. Recent moves by BlackRock, the world's largest asset manager, underscore this dynamic. According to a report by Marketscreener, BlackRock's long position in the H-shares of Aluminum Corporation of China (Chalco) rose to 5.15% on September 11, 2025, from 4.71% previously, despite a brief dip to 5.16% on September 2BlackRock's long position in H-shares of Aluminum Corporation of China increases to 5.15% on Sept 11 from 4.71%, HKEX says^[1]. These fluctuations, while seemingly minor, reflect a broader recalibration of institutional portfolios in response to shifting global value chains and China's evolving industrial policy.

A Sector in Motion: Chinese Industrials and Global Value Chains

China's industrials sector is undergoing a dual transformation: domestically, it is being reoriented toward advanced manufacturing and green technology, while internationally, it is expanding into high-growth markets. As stated by Pimchina, China's 2025 Stabilizing Foreign Investment Action Plan emphasizes market access liberalization in advanced manufacturing and green energy, removing all ownership restrictions in the manufacturing sectorChina's 2025 Foreign Investment Strategy | Pimchina^[2]. This policy shift aligns with BlackRock's recent strategic emphasis on diversification through international equities and alternative assets, as outlined in its Fall 2025 Investment Directions2025 Fall Investment Directions | BlackRock^[3].

Meanwhile, Chinese industrial capital is increasingly flowing into Southeast Asia, the Middle East, and Central Europe. For instance, Türkiye and Hungary have emerged as hubs for Chinese electric vehicle and lithium battery manufacturers, while Saudi Arabia and the UAE are deepening ties in renewable energyChina's 2025 Foreign Investment Strategy | Pimchina^[2]. This outward migration of industrial activity has not deterred institutional investors like BlackRock; rather, it has prompted a nuanced approach to H-share exposure. By increasing stakes in domestic industrial giants like Chalco, BlackRock appears to be hedging against geopolitical risks while capitalizing on China's domestic industrial modernization.

BlackRock's Calculus: Balancing Caution and Confidence

BlackRock's investment in Chalco is emblematic of its broader strategy in Chinese industrials. While the firm has scaled back positions in certain energy companies like SinopecBlackRock reduces stake in Sinopec: Is this a sign of changes ahead for Chinese energy companies?^[4], it has simultaneously ramped up investments in logistics real estate and infrastructure through partnerships with GLP and ESRBlackRock reduces stake in Sinopec: Is this a sign of changes ahead for Chinese energy companies?^[4]. This duality—reducing exposure to cyclical energy assets while deepening commitments to logistics and green infrastructure—highlights a calculated alignment with China's dual carbon goals and urbanization trends.

The Aluminum Corporation of China, a state-owned enterprise pivotal to the global aluminum supply chain, benefits from this alignment. As noted by Asianfin, BlackRock's increased stake in Chalco aligns with its focus on companies positioned to capitalize on China's industrial modernizationA Deep Dive into BlackRock's Heavy Investments in Chinese Assets^[5]. This move also complements the firm's broader portfolio rotations, including heightened exposure to new-energy vehicle (NEV) manufacturers like BYD and tech platforms such as AlibabaA Deep Dive into BlackRock's Heavy Investments in Chinese Assets^[5].

Institutional Sentiment and Sector Rotation: What's Next?

The recent data from CICC reveals a broader trend: top foreign institutions reduced A-share holdings by 5.2% in Q2 2025 but increased Hong Kong stock exposure by 7.7%CICC: How are top global institutions allocating Chinese equities …^[6]. This shift suggests a preference for H-shares and Chinese concept stocks, which are perceived as less sensitive to domestic regulatory risks. BlackRock's Chalco investment fits squarely into this trend, offering a blend of industrial stability and growth potential.

However, challenges persist. Geopolitical tensions and regulatory uncertainties remain tail risks, as evidenced by BlackRock's reduced Sinopec stakeBlackRock reduces stake in Sinopec: Is this a sign of changes ahead for Chinese energy companies?^[4]. For institutional investors, the key lies in balancing these risks with opportunities in sectors like green energy and AI, where China's policy tailwinds are robust.

Conclusion: A Strategic Inflection Point

BlackRock's strategic build-up in Chalco signals more than a tactical trade—it reflects a recalibration of institutional sentiment toward Chinese industrials. By leveraging H-share exposure, the firm is positioning itself to benefit from China's domestic industrial upgrades while navigating the complexities of a fragmented global economy. For investors, this underscores the importance of sector rotation and policy alignment in an era of shifting value chains.