International Investors Favor Chinese Assets

　　In the first half of this year, foreign investors net increased their holdings of domestic Chinese stocks and funds by $10.1 billion, with the net increase rising to $18.8 billion in June alone. Data from the State Administration of Foreign Exchange (SAFE) indicates that foreign allocation of RMB-denominated assets remains generally stable, with growing investment in RMB bonds and a positive trend in foreign investment in domestic stocks, reflecting stronger global capital interest in RMB assets.

　　"In the future, foreign allocation of RMB assets still has stable and sustainable growth potential," said Jia Ning, Director of the Balance of Payments Department at SAFE. Currently, foreign investors hold about 3% to 4% of the market value of domestic bonds and stocks, and with multiple positive factors at play, it is expected that foreign capital will continue to gradually increase its holdings of RMB assets.

　　Why are Chinese assets favored by international investors? On one hand, China's robust economic fundamentals provide a stable macroeconomic environment for foreign investment. On the other hand, the high-quality development of financial markets creates a favorable policy environment for foreign investors.

　　The International Monetary Fund (IMF) recently significantly raised its forecast for China's economic growth, increasing it by 0.8 percentage points compared to its April projection. Earlier, global investment banks such as Deutsche Bank, Morgan Stanley, and Goldman Sachs also upgraded their growth expectations for China this year.

　　Meanwhile, Goldman Sachs maintains an "overweight" stance on Chinese equities, expecting increased preference for RMB-denominated assets, sustained improvements in corporate earnings, and stronger foreign capital inflows into China's stock market. Morgan Stanley has raised its targets for Chinese stock indices, projecting a 5% increase for the MSCI China Index, a 5% rise for the Hang Seng Index, and a 3% gain for the CSI 300 Index by June 2026.

　　Wang Yajun, Head of Equity Capital Markets for Goldman Sachs Asia (ex-Japan), stated that against the backdrop of global capital seeking diversified allocations, China’s offshore market and A-shares are expected to continue benefiting from capital rebalancing.

　　Technology and consumer sectors have become the primary investment themes for overseas investors. This year, foreign institutions such as Goldman Sachs, Fidelity Investments, and Schroders have frequently appeared in the research lists of A-share listed companies, covering industries like electronics, pharmaceuticals, biotechnology, and machinery.