Since the start of August, prominent financial institutions such as Goldman Sachs and UBS have issued a series of statements asserting that opportunities within China's stock market are not only expanding but also becoming more balanced, reaffirming their medium-to-long-term optimistic outlook. In tandem with these public declarations, a diverse array of foreign capital entities—including family offices, sovereign wealth funds, and asset managers—have been conducting intensive due diligence on A-share listed companies. These efforts aim to gain an up-close understanding of the technological capabilities, developmental momentum, and investment appeal of these enterprises.
Foreign institutions are not merely voicing their confidence in Chinese assets publicly; they are also visiting the production and R&D facilities of listed firms. Through site tours and panel discussions, they are evaluating core technologies, product applications, and market strategies firsthand. Data from Wind indicates that, as of August 24th, over 590 foreign institutions have conducted a combined total of 4,630 research surveys this year. In terms of target selection, these investors are showing a clear preference for leaders in the technology and manufacturing sectors. Between the start of August and August 24th, 146 foreign institutions completed 354 research visits to A-share companies, with Goldman Sachs being the most active, covering approximately 14 individual stocks. The primary themes guiding these August investigations revolved around innovative pharmaceuticals, AI computing power and the optoelectronic industry chain, as well as new energy materials and advanced manufacturing. From a market perspective, this activity signals that foreign investors are actively seeking core assets that possess both global competitiveness and support from industrial trends.
Bringing overseas investors directly to the company premises is a vital channel for enhancing the international market's comprehension of China's listed companies. Beyond the proactive efforts of the foreign institutions themselves, stock exchanges are also facilitating deeper engagement. For instance, the Shanghai Stock Exchange has organized interactions between overseas institutional investors and more than 50 Shanghai-listed companies so far this year. As a case in point, from August 17th to 20th, nearly 30 institutional investor representatives from emerging markets like Thailand and Saudi Arabia traveled to Beijing, Hangzhou, and Shanghai. They conducted field visits to nine STAR Market companies, including MetaX Institute of Integrated Circuit (Shanghai) Co., Ltd. and SUPCON Technology Co., Ltd., gaining direct insight into the persistent investment and innovative output within key core technology sectors. This particular research tour attracted participation from a wide spectrum of foreign institutions, including family offices, asset management companies, insurance firms, and commercial banks.
A growing number of institutions believe that the positive factors for the A-share market are steadily accumulating. Li Changfeng, Head of Market Strategy at AllianceBernstein Fund, stated that the Chinese market presents a combination of growth and reform opportunities. In terms of corporate governance, improvements driven by enterprise reforms, efforts to curb industry involution, and enhancements in dividends and share buybacks are expected to spur a recovery in non-AI related stocks, while the value of dividend-yielding themes is also becoming more apparent.
The technology sector remains a central focus for foreign investors. The UBS Wealth Management Chief Investment Office notes that from a policy standpoint, high-tech fields continue to be regarded as a key growth engine. Furthermore, investment in national major strategic implementations and key sector security capabilities is set to increase, benefiting high-tech manufacturing and the critical AI supply chain. Addressing market concerns about crowded trades, Meng Lei, China Equity Strategy Analyst at UBS Securities, pointed out that the overall leverage ratio in the A-share market is manageable. Given the recent rapid decline in margin financing balances, the market's deleveraging process may be nearing its conclusion in the short term. Notably, incremental capital is expected to continue flowing into technology-oriented stocks. The quarterly index adjustment by MSCI, scheduled to take effect after the market close on August 31st, is anticipated to channel definitive incremental funds into newly included constituents, with foreign allocation logic leaning towards the tech sector.
Beyond policy and capital flow signals, the industrial logic of the AI sector is a core pillar of foreign institutions' confidence. Despite recent pullbacks in some AI-related stocks, many foreign investors argue that the long-term AI narrative remains intact. China's equity market offers relatively independent and diversified growth opportunities, retaining its allocation value over the long term. "Even amid short-term volatility, AI remains one of the investment themes with relatively strong growth certainty. The recent correction may have provided an attractive long-term entry point," Li Changfeng added, noting that while export-oriented tech chains may experience volatility from overseas markets, diversified AI tracks such as domestic substitution and high-cost-performance large models present investment value.
Liu Jintian, Goldman Sachs' Chief China Equity Strategist, commented that for a considerable portion of China's AI hard-tech stocks, risks related to speculative gains, valuation premiums, leverage, and concentrated positioning have been released during the recent correction. Given the still-robust fundamental support for AI and other liquidity trends, Goldman Sachs maintains its "overweight" stance on A-shares and continues to favor the AI hard-tech sector from a structural perspective. Neuberger Berman Fund also believes that China's AI industry trend remains solid, with positive factors like the acceleration of domestic computing power and the continuous iteration of large models still building momentum, and that corporate earnings and industrial logic have not weakened.
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