Korean investors, heavily buying Chinese assets

In the first half of this year, overseas capital's enthusiasm for allocating Chinese assets has continued to heat up, with South Korean investors significantly increasing their positions in the Chinese market through ETF channels, focusing on technology, new energy, and broad-based index-related targets. At the same time, multiple Chinese technology ETFs listed in the US have also seen sustained net capital inflows, indicating growing recognition among international capital of the long-term development potential of China's technology industry.

South Korean Investors Aggressively Buy Chinese ETFs

Data from the Korea Securities Depository shows that in the first half of the year, South Korean investors actively deployed Chinese assets through ETFs.

Specifically, in the A-share market, the ChinaAMC CSI 5G Communication Theme ETF ranked first in net purchases among South Korean investors with $4.3764 million in net buys, becoming the most favored A-share ETF. Additionally, the ChinaAMC CSI Semiconductor Chip ETF, E Fund CSI Artificial Intelligence ETF, and Fullgoal SSE Composite Index ETF recorded net purchases of $2.9011 million, $2.63M, and $1.9125 million respectively in the first half of the year.

Among ETFs listed in Hong Kong, the Global X China Semiconductor ETF topped the list with $42.3946 million in net purchases, highlighting South Korean capital's keen interest in China's chip industry. It was followed by the Global X China Electric Vehicle and Battery ETF and the ChinaAMC CSI 300 Index ETF, with net purchases of $29.4249 million and $18.3417 million respectively.

Beyond South Korean investors, multiple Chinese technology ETFs listed in the US also experienced significant net capital inflows. Data shows that as of June 30, the Invesco China Technology ETF had an asset size of $3.32B, following growth of 9.89% and 15.56% in April and May respectively, and a further 5.18% in June, achieving three consecutive months of scale expansion.

As of June 29, the Rayliant China Innovation Technology ETF had an asset size of $35.1363 million, surging 34.94% since June, also achieving three consecutive months of scale growth. In the first half of this year, the ETF's size grew significantly by 151%. The latest top ten holdings of the Rayliant China Innovation Technology ETF include ZTE, Tencent Holdings, Alibaba, CATL, Cambricon, Eoptolink, GigaDevice, and other stocks.

International Capital Favors Chinese Technology Assets

Overall, the concentrated increase in international capital positions in China-related technology assets stems from deep recognition of China's core industrial competitiveness by various global sovereign funds and professional investment institutions.

According to the latest released "Invesco Global Sovereign Asset Management Study" report, some sovereign investors believe that China is building a long-term industrial structure and reserving a large pool of talent. Additionally, China's approach to developing AI infrastructure, which focuses on widespread application and cost-effective efficiency, is also considered strategically significant, potentially as important as developing the most powerful AI models.

"China's strategy is distinctly different from that of the US, placing greater emphasis on scaled application and efficiency improvement. Its core philosophy is: achieving broad deployment at low cost, whose strategic value may not be inferior to developing the most cutting-edge models," said an institution deeply investing in AI infrastructure in the Middle East.

"We maintain our bullish view on the Chinese technology sector while continuing to emphasize the need for selective picks, consistent with our approach to global AI portfolio strategy. Within the global AI framework, we prioritize Chinese semiconductor equipment manufacturers and semiconductor companies, followed by the hardware sector. We believe these sectors should continue to benefit from increased AI infrastructure investment and policy-driven trends toward domestic supply chain self-reliance and industrial upgrading," said UBS Wealth Management.

Morgan Stanley Fund stated that the performance of the AI sector depends on whether its own narrative logic can be continuously strengthened, and currently, this trend is still continuing. In addition to the long-term narrative, its short-term earnings support is also relatively strong. According to data from the National Bureau of Statistics, the profits of industrial enterprises above a designated size maintained a positive trend in the first five months of this year, indicating that the overall earnings growth of listed companies is expected to continue upward. Looking at industry classifications, high-growth areas remain concentrated in the technology and mineral products sectors.

Source: Shanghai Securities News

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