What’s going on here?
Chinese stocks held their ground this week even as global tech shares tumbled and Washington ramped up trade scrutiny. Both the CSI300 and Hang Seng indexes logged a 1% weekly gain, pulling foreign investors back into the mix.
What does this mean?
While China’s major indexes dipped slightly by midday Friday, they still outpaced the hefty losses seen in tech-heavy markets across the US and Asia, where fresh doubts about artificial intelligence hit shares hard. UBS reports foreign institutional investors boosted their Chinese equity holdings last quarter, cutting their underweight positions to the highest level since early 2023. The STAR50 Index—China’s hub for innovative firms—climbed almost 1% this week, pointing to steady appetite for domestic tech even with hurdles like the US blocking Nvidia’s latest AI chips from China. Meanwhile, diplomatic moves, such as the US pausing port fees and resuming shipbuilding talks, show attempts to cool trade tensions. Still, China’s softer export data highlights it isn’t all smooth sailing economically.
Why should I care?
For markets: Foreign investors edge back as China steadies.
Despite swings in indexes like Hang Seng Tech, major global investors are inching back into Chinese equities. The top 40 global funds now hold their highest Chinese exposure in over 18 months, brushing off near-term export softness in favor of longer-term optimism around tech and signs of improving trade relations.
The bigger picture: Global tech faces turbulence while China adapts.
With the recent pause in global AI-driven rallies exposing weaknesses outside China, selective interest in Chinese tech is reemerging. Ongoing diplomatic efforts and a careful approach to technology exports could support more stable cross-border investment and boost market confidence, even as economic and regulatory challenges continue.
