Chinese assets see historic revaluation as foreign holdings top $591B

Chinese assets are undergoing a historic revaluation driven by their low correlation with US equities and China's global lead in artificial intelligence, new energy and biotechnology, HKEX Chief Executive Officer Chen Yiting said Thursday.

"Chinese assets have two major strengths — they have an especially low correlation with US assets, making them highly valuable for portfolio diversification, and China's economy has strong resilience and vast potential," Chen said at the Shenzhen Stock Exchange's 2026 Global Investor Conference.

Overseas investors now hold more than 4 trillion yuan ($591.2 billion) in tradable A-shares, up from 3.07 trillion yuan in June 2025, according to Liu Haoling, vice-chairman of the China Securities Regulatory Commission. Global investment firms including Morgan Stanley, Barclays and the Abu Dhabi Investment Authority have ramped up exposure to Chinese equities in the first quarter, with ADIA expanding its A-share portfolio to 66 stocks from 29 in the prior period.

The revaluation comes as US equities face headwinds from tariff uncertainty and stagflation fears, with the S&P 500 slipping 0.7% year to date. China's emerging sectors — particularly AI, green energy, energy storage and biotechnology — are leading global advancement, Chen said, presenting opportunities for international capital seeking returns outside a volatile US market.

Chen outlined a three-pronged collaboration framework between HKEX and the Shenzhen Stock Exchange to connect capital with opportunities. On the people front, the exchanges aim to bring international investors to Hong Kong and mainland capital markets. On products, they plan to enrich offerings to meet diverse investor needs. On market infrastructure, both exchanges must continuously optimize systems and mechanisms to enhance the investment experience, she said.

Morgan Stanley's top two holdings at the end of the first quarter were leading Chinese optical module makers, a sector critical to AI data center infrastructure. ADIA focused on high-end manufacturing and core technologies, expanding its A-share portfolio to 66 stocks from 29 in the prior quarter. AllianzGI Chief Investment Officer for Equities Michael Heldmann said he is long-term bullish on China's equity market at the same conference, citing the country's credit, interest rates and exchange rates as key metrics of strong stability.

The divergence between US and Chinese equity markets is widening. While the S&P 500 has declined 0.7% year to date, the Morningstar Global Markets ex-US Index — tracking emerging and developed-market stocks outside the United States — has gained 12.8% in the same period, highlighting the diversification benefits Chen mentioned. Gold, another traditional safe haven, has surged 25.2% year to date to trade near $4,535 an ounce as investors hedge against geopolitical uncertainty.

The last time Chinese assets attracted such concentrated foreign inflows was during the 2020-2021 period when the CSI 300 rallied more than 30% on the back of China's rapid post-pandemic recovery and monetary easing. The current wave differs in its sector focus — rather than broad index exposure, foreign capital is targeting specific high-growth industries where China holds a technological edge.

Allocating to Chinese assets offers global investors a diversification benefit at a time when US-centric portfolios face concentrated risk from tariff policy, inflation uncertainty and elevated equity valuations. The HKEX-SZSE collaboration framework, if executed effectively, could further lower barriers for international capital seeking exposure to China's next generation of technology leaders.

This article is for informational purposes only and does not constitute investment advice.