China’s equity issuance has doubled to $16.8 billion as global investors are drawn to the country’s technology sector. The surge in interest has led to a 140% increase in IPO activity in Hong Kong. Chinese stocks are attractive to investors due to their cheaper valuations compared to other major markets.
This affordability, combined with the ongoing global tech race, has encouraged investors to reallocate their portfolios towards Chinese equities. The influx of investments shows growing confidence in China’s financial markets, despite geopolitical tensions and economic uncertainties. As the technology sector continues to expand and innovate, it is expected to further drive equity issuance and market participation in China.
Foreign investors poured $1.2 billion into Chinese equities this week, the largest inflow since October 2024. The surge was driven by rallies in EV giant BYD and Chinese AI firms, boosting confidence in China’s market rebound and attracting global fund managers. BYD has been a key player in powering China’s market rally, with its performance closing in on Tesla, its main competitor in the electric vehicle space.
China’s tech sector attracts investors
The excitement around advancements in AI and technology also continues to deepen global investors’ interest in China. China’s MSCI index rose 22 percent last year and has advanced by a further 12 percent since January.
This suggests that while attention was focused on US tech stocks, some investors were seeking to capitalize on China’s lead in fields such as battery tech, drones, robotics, and electric vehicles. The jump in the MSCI index also reflects the double-digit rises of its three largest constituents: Tencent, Alibaba, and Meituan. The share price increases suggest optimism, despite a debt-laden property market and low consumer confidence.
Premier Li Qiang has promised more stimulus to shield manufacturers from tariffs and solutions to the housing slump, emphasizing that boosting consumption is the top priority. The budget for the consumer goods trade-in program is set to be raised, which is good news for BYD and other EV players. Investing in China can be hazardous, and investors should tread carefully.
It is possible to buy shares in US and Hong Kong-quoted Chinese companies through investor platforms, or invest through a fund or trust. For those seeking wider exposure to Asia, the Templeton Emerging Markets Investment Trust (Temit) and the JP Morgan Emerging Markets trust are options to consider, as they hold stakes in various Asian companies while also providing some counterbalance through investments in other regions.
