Foreign Investors Boost Chinese Tech Sector Exposure by 90%

Foreign investors have shown a growing interest in the Chinese market, particularly in the technology sector. Recent findings from a roadshow in the United States indicate that over 90% of participating investors are willing to increase their exposure to the Chinese market, marking the highest proportion since early 2021. This shift in interest is driven by several factors, including China's leading position in areas such as humanoid robots, robotics, and biopharmaceuticals, which make it an essential part of global investment portfolios.

In addition to the United States, Asian investors have also shown significant interest. Data from the Korean Securities Depository shows that as of the end of August, Korean investors have traded 650 million dollars worth of Chinese stocks (A-shares and Hong Kong stocks combined) this year, with a total holding value of 350 million dollars, an increase of nearly 50% compared to the same period last year. This surge in interest is attributed to China's recent economic stabilization measures, improved market liquidity, and the growing need for global investors to diversify their portfolios away from the U.S. market.

The technology sector has been a particular focus for foreign investors. The primary trading venues for hot sectors such as artificial intelligence, semiconductors, humanoid robots, and new consumption are concentrated in A-shares and Hong Kong stocks. This has driven American investors to extend their interest towards onshore markets. While American investors still prefer offshore markets for their investments in China, some quantitative and macro funds have indicated that they will quickly enter the Chinese stock market through A-shares ETFs and index futures when they lack the time or resources for individual stock selection.

The strategic shift in foreign investment in the Chinese market is evident. There is a move from defensive to offensive sector preferences, with traditional consumption giving way to technology growth and high-end manufacturing. Policy and valuation have become key drivers, with low-valued technology leaders and stable dividend-paying bank stocks attracting attention, especially in the context of rising expectations for U.S. Federal Reserve rate cuts. Overall, foreign investments in A-shares are structurally focused on high-growth technology, high-dividend assets, and high-end manufacturing. Since July, sectors such as technology, healthcare, and materials, particularly companies related to the AI industry chain, have become key areas for foreign investors due to their clear technological advancements and earnings prospects.

The recent rise in the A-share market is not driven by a single factor but by a combination of policy adjustments, improved liquidity, and a stronger economic fundamentals. This multifaceted support has contributed to the growing interest and investment in the Chinese market, particularly in the technology sector. The trend indicates a sustained and increasing foreign investment in China, driven by the country's technological advancements and favorable market conditions.