Shanghai Stock Exchange international roadshow drives traffic: "Long-term foreign capital" is optimistic about China's asset allocation value

Ask AI · What’s the core logic behind long-term foreign capital’s optimism about China’s assets?

Caixin Global, March 20 (as reported by reporters Zhang Xiaoyu, Wang Yanlin, and intern Heng Xiaoyu) International turmoil shows no sign of abating, while China’s macroeconomy remains steadily on a positive trajectory; volatility in global markets has not changed the long-term allocation value of China’s assets.

Recently, the Shanghai Stock Exchange held the first online roadshow of this year’s “attracting long-term capital” series, focusing on interpreting the positive signals from the National Two Sessions, showcasing China’s improving macroeconomic performance and investment opportunities in the capital markets. This roadshow is targeted at long-term allocative foreign capital. Nearly 40 foreign institutions participated, including representative asset management firms, custodians, and securities firms from Europe, the U.S., Asia-Pacific, and the Middle East.

Resilient and full of vitality, with steady and enterprising running in parallel—this is the “underlying logic” behind “long-term foreign capital” looking favorably on the value of allocating to China’s assets. Based on statistics on QFII and northbound fund holdings, foreign investors’ shareholding in A-shares has remained stable at the scale of hundreds of billions of shares for many years. About 60% of the positions are allocated to companies listed on the Shanghai market, and the related high-quality assets also bring stable returns for overseas “patient capital.”

Safety + Resilience China’s asset “niche” is rising

With the global capital market environment increasingly complex and volatile, China’s assets are seeing their appeal and safety continue to improve. Against this backdrop, the Shanghai Stock Exchange held a Two Sessions-focused international roadshow this week, promptly transmitting the positive signals released by the National Two Sessions to international investors and further attracting more overseas long-term capital to enter the market.

The SSE said that China’s macro policies are currently positive, practical, and emphasize high-quality development, with fiscal and monetary policies coordinating to provide support for the economy. Driven by strong supply advantages and improved market risk appetite, China’s capital markets offer clear investment opportunities.

Liu Song, Chairman of Lobo Max Fund Management (China) Co., Ltd., said in an interview with Caixin Global reporters that, from the perspective of “using global industry logic to interpret China’s assets,” the independence of China’s assets is no longer something isolated; rather, it exists as an indispensable “stabilizer” within the global industrial chain. Taking the AI technology sector as an example, the world is effectively forming two relatively independent ecosystems. In 2025, global capital is highly concentrated in U.S. AI computing power and model layers, which has pushed foreign capital’s allocation share to China’s AI ecosystem to a historical low. Entering 2026, as China makes rapid breakthroughs in the “indigenous technology” area, this “allocation vacuum” is triggering strong demand to catch up.

Jiang Xianwei, Senior Global Market Strategist at Morgan Asset Management China, told Caixin Global reporters: Looking from the internal environment, the “15th Five-Year Plan” proposes that China’s GDP per capita should reach the level of moderately developed countries by 2035, which can be seen as anchoring the next decade. China’s economy will still strive to maintain a relatively high growth rate every year. Meanwhile, this year’s Two Sessions set the economic growth target at “4.5%-5%, with efforts to achieve better results in actual work,” laying a foundation for the goal of reaching the level of moderately developed countries in terms of GDP per capita, while also taking into account the reality that overall environmental challenges this year remain many. It can be described as being pragmatic while staying positive. Looking back at the past, the growth targets set by the Chinese government every year have been achieved as planned, undoubtedly improving the attractiveness of allocating to China’s assets.

“Under the backdrop of recent geopolitics triggering war, investors may already have begun to re-recognize China’s assets in the medium and long term in terms of safety and independence, and the process of repricing may have already started.” Wang Xiaojing, Chief Investment Officer of Equity, Quantitative and Multi-Asset at BlackRock, believes: As the U.S. and China are among the very few markets in the world that both have sufficient market capacity and can provide physical security, their assets will have a safety premium.

Confidence + Patience Long-term foreign capital allocates China’s assets steadily

Acknowledgment of the safety, appeal, and allocation value of China’s assets has already directly translated into the actual actions of foreign capital institutions. Using QFII + northbound funds as the statistical scope, foreign investors’ allocation scale in A-shares has remained stable at above one trillion shares for many years, with a considerable portion belonging to long-term funds.

According to Wind data, as of the end of last year’s third quarter, QFII institutions held shares in 285 Shanghai-listed companies, with a total holding of 5.238 billion shares, accounting for nearly 60% of the total QFII holdings in A-shares (8.756 billion shares) within the same period. In addition, as of the end of 2025, northbound funds held shares in 1,733 Shanghai-listed companies, with a total holding of 66.482 billion shares, also accounting for more than 60% of the total northbound A-share holdings of 107.857 billion shares in that same period.

Over the past year, foreign capital also generated substantial returns from additional investments in high-quality Shanghai-listed companies. For example, Xiamen Tungsten Industry & Co., Ltd. on the main board: in the third quarter of last year, northbound funds increased their holdings aggressively, adding 25 million more shares; from October last year to February this year, the company’s stock price has seen a cumulative increase of over 130%.

Another example is the STAR Market company Run Technologies. Northbound funds added positions quarter by quarter over the four quarters of last year; its shareholding volume doubled compared with the end of 2024, and the stock price has also risen steadily. Its cumulative gain was about 75% last year, and it rose more than 20% again this year.

So, what is the core logic for foreign institutions to keep increasing their exposure to China’s assets?

The answer provided by Liu Song is “certainty”: “Compared with many economies that are still dealing with high inflation pressure, China today combines economic resilience with a mild and controllable inflation level. The stability of this fundamental condition itself is a scarce advantage.”

Jiang Xianwei believes this is based on relatively higher economic growth rates, a clear policy direction, improving macro data performance, and enterprise earnings recovery driven by industrial structure transformation and upgrading.

“From the broader environment, the main upward catalysts this year include the development of artificial intelligence that is still relatively early; related demand growth will most likely support economic growth, especially given the unique opportunities brought by domestically controllable and self-reliant advantages. Also, last year’s ‘anti-involution’ policies clearly boosted product price-and-margin recovery in certain industry sectors. With those policies continuing to show effectiveness this year, the expectation is that more industries and companies will benefit.” Jiang Xianwei said.

However, Jiang Xianwei also candidly admits: This year the capital market may face more complex challenges, including inflation rebounds caused by ongoing geopolitical conflicts; the resulting global supply chain disruptions; and global monetary easing policy reversals.

Liu Song also told reporters that potential risks cannot be ignored; the core lies in the smoothness of price transmission—specifically, whether a rise in upstream PPI can be smoothly transmitted to downstream CPI. There are mainly two points to observe: first, whether rising prices will suppress end demand; second, if PPI rises but CPI does not follow sufficiently, it may squeeze the profit space of midstream and downstream companies, putting pressure on short-term stock prices. He also judged that even if profits face pressure in the short term, the incremental liquidity brought by global funds’ reallocation would, to a large extent, offset this negative impact, thereby supporting the market.

Regulation + Openness Improve the “investability” of China’s assets

The “15th Five-Year Plan” proposes: to optimize the Qualified Foreign Institutional Investor system, expand the range of investable products, and orderly advance cross-border two-way direct financing by eligible enterprises. It also supports cross-border investments by equity investment funds. At the same time, it calls for expanding the ways of using foreign capital, improving the administration of foreign capital mergers and acquisitions, and broadening channels for foreign investments in the securities market. In addition, the plan also mentions improving the convenience for foreign capital to conduct equity investments and venture capital in China.

In this international roadshow, the SSE said that under the guidance of the China Securities Regulatory Commission, it will firmly and unwaveringly promote high-level opening-up. It will focus on building a top-tier business environment that is market-oriented, rule-of-law based, and internationalized. In order to enhance cross-border investment and financing convenience, it will carry out more roadshow activities with rich themes and diverse content for international investors, continue to tell China’s capital market story well, convey the investment value of the domestic market, and help create a more transparent, stable, and predictable market environment.

Continuous policy “activation” gives foreign capital institutions investing and conducting business in China a broader stage. The scope for foreign institutions’ investments is gradually expanding, investment instruments are becoming more diversified, business processes are continuously being simplified, and the convenience for investing in high-quality China assets has improved significantly.

With China’s assets becoming more investable, which sectors will foreign capital front-load this year?

Jiang Xianwei told Caixin Global reporters that in the short term, Morgan Asset Management’s allocation in the A-share market will focus more on “HALO” assets—energy that has a positive correlation with geopolitics and low-position defensive assets—as well as sectors with independent growth logic. From a medium-to-long-term perspective, historical data show that market turbulence caused by geopolitical conflicts tends to be shorter than economic recessions. Therefore, it will continue to focus on directions supported by both domestic policies and overseas demand, such as AI power and computing-power and power coordination. Under the indigenous controllability logic for rising domestic capital expenditures (domestic computing power, cloud services, etc.), attention will be paid to overseas computing power chains that are developing continuously (optical modules, PCBs, etc.), as well as future industrial opportunities driven by domestic policy and reversal chances resulting from improved supply and demand.

Regarding the bond market, Jiang Xianwei added: under recent geopolitical conflicts, attention should be paid to mid-end opportunities created by the short-term steepening of the yield curve. Over the medium to long term, it will focus on products with higher certainty amid the resonance of domestic inflation recovery, monetary easing, liquidity, and institutional trading behavior.

Wang Xiaojing believes that this year investors should pay attention to some opportunities in the AI wave. In addition to the broad remolding of productivity and the production relationship, assuming the short- to mid-term contest is about providing energy stability and pricing for scalable computing power per Token, there are many leading technology enterprises in the Hong Kong market. There are also many industry-chain companies in the A-share market backed by the country’s energy and technology system, which will demonstrate incremental competitive strength globally.

Liu Song said he remains continuously optimistic about China’s stock market. Although external factors may slow the pace of recovery, inflows of overseas capital and the rebound in overseas demand will provide support for the stock market. Regarding the bond market, based on expectations for inflation to recover, he has maintained a strategy of allocating to shorter duration products. He further explained that China’s capital market has gradually “evolved.” Investors can no longer rely solely on the risk-return profile of a single asset to generate returns; they must benefit through interactions and correlations among different asset classes.

(Caixin Global reporter Zhang Xiaoyu, Wang Yanlin, and intern Heng Xiaoyu)