Foreign capital has been actively deploying in A-shares since the second quarter of this year. Data shows that as of the end of Q2, the market value of northbound Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect holdings exceeded 3 trillion yuan for the first time. Based on the research and rebalancing activities of foreign institutions, the appeal of the domestic artificial intelligence (AI) industry chain is becoming increasingly prominent.
Chan Mingkang, a senior equity strategist at Bloomberg Intelligence, noted that the upward momentum in China's stock market is expected to continue. In the second quarter, opportunities from the AI industry chain, combined with the resilience of the yuan, boosted foreign investors' demand for A-share allocations. As of August 2, a total of 572 foreign institutions had conducted 4,161 research visits to A-share listed companies year-to-date. Among them, 17 institutions were particularly active, each conducting over 50 visits. Specifically, overseas hedge fund Point72 led the count with 111 visits. Institutions such as Goldman Sachs, Bank of America, JPMorgan Chase, Citibank, and Nomura Securities were also highly active, covering areas including domestic tech industry leaders and popular growth stocks, such as Canadian Solar, JinkoSolar, Orbbec, and Zhongji Innolight.
From an industry perspective, semiconductors, automation, computing hardware, and innovative medical technology were the key sectors for foreign institutional research. Additionally, sectors like consumer electronics and photovoltaics also attracted significant attention from foreign institutions. The breadth of foreign institutional research is rapidly translating into depth of holdings. As A-share companies release their 2026 interim reports, the latest heavyweight positions of Qualified Foreign Institutional Investors (QFII) are gradually emerging.
Based on the disclosed 2026 interim reports, as of the end of Q2, QFII appeared in the top ten circulating shareholders of 38 stocks, with a total holding market value of 17.029 billion yuan. Compared to the Q1 data under the same口径, 19 of the 38 stocks received new QFII investments in Q2, with a total holding market value of approximately 13.133 billion yuan. Notably, Contemporary Amperex Technology Co Ltd (CATL) alone contributed over 10 billion yuan to this figure. The QFII holdings also exhibit a distinct "headlining" characteristic.
As of the end of Q2, the top five QFII holdings by market value among the 38 stocks were CATL, Hongfa Technology, Asiacentury Technologies, Xian Leading Electric, and Zhongke Special Gas. For example, in the first quarter, Hongfa Technology had only one QFII in its top ten shareholders, holding about 20.2981 million shares. By the interim period, the company's top ten shareholders included four QFIIs, holding a combined total of about 62.0959 million shares.
A research report from UBS Securities suggested that AI-related trade is a primary driver of China's foreign trade growth, contributing nearly half of the increase in imports and exports in the first half of the year. This strong performance is more driven by prices than trade volume, reflecting a market supply shortage. Li Changfeng, head of market strategy at AllianceBernstein Fund, believes that for the cyclical tech hardware sector, low valuations sometimes correspond to the top of earnings expectations. In this context, targets with high certainty of earnings realization and solid fundamental support are more worthy of attention.
"Although China still faces challenges in high-end AI hardware, the industry's spillover effects are providing clear support for the domestic tech sector, with the storage track being a typical example," Li noted. Data shows that China's share of global DRAM production capacity has steadily increased from 10% in 2019 and is expected to reach 24% by 2026. The growth of the domestic storage industry chain has become a core theme in the A-share market this year. "Chinese companies have significant advantages in promoting practical AI applications and expanding application scenarios. On one hand, China has a vast market scale; on the other, it has a strong manufacturing base and a complete supply chain system. JPMorgan Chase's research shows that global AI and semiconductor capital expenditure is effectively supporting China's exports and high-end manufacturing," said Zhu Feng, chief China economist and head of Greater China economic research at JPMorgan Chase.
Xiong Wei, a Chinese internet industry analyst at UBS Securities, stated that in the long run, amid global competition, China's large language models not only perform well but also have increasingly prominent cost advantages. UBS remains optimistic about the competitiveness and commercialization potential of Chinese large model companies.
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