To The Moon

Market turbulence presents both hazards and openings for investors, and foreign capital represented by QFII vehicles has maintained its aggressive accumulation stance amid the A-share market's structural trends. With the conclusion of interim earnings disclosures, QFII positioning data for the second quarter has come to light, revealing an amplified buying tempo relative to the first three months. Latest figures from Oriental Choice show 42 qualifying foreign institutions appearing among the top ten circulating shareholders of 1,710 A-share firms by the end of Q2, with their combined holdings valued at 337.007 billion yuan, marking an upswing exceeding 190 billion yuan against the March quarter. Across sector allocations, the electronics industry claimed the top spot with market value of 102.622 billion yuan, representing a near-350% surge over the first quarter's figure of 22.87 billion yuan. Notably, Goldman Sachs stands out as the most aggressive buyer on the QFII roster, entering the top ten shareholder lists of 1,150 A-share listed companies during the quarter and amassing approximately 62.144 billion yuan in holdings, or close to one-fifth of the total QFII market value. The swelling QFII valuation stems partly from genuine capital infusions and partly from robust gains in technology plays during April-June, particularly semiconductor names. Meanwhile, Middle Eastern sovereign wealth funds including the Abu Dhabi Investment Authority and Kuwait Investment Authority posted the fastest sequential growth in holdings, underscoring their expanding footprint in the domestic bourse, according to Wang Jun, a Shanghai-based private fund manager who tracks foreign positioning closely.

The broader shift toward overweighting China is even more pronounced. Wind data show that as of June 30, more than 180 overseas institutions—excluding private equity vehicles—had taken spots among the shareholder registers of A-share companies, with QFII/RQFII presence visible in the top ten circulating shareholders of 1,724 stocks. Foreign institutions collectively owned 122.246 billion A-shares, up 4.75% from end-March, with total market value surpassing 3 trillion yuan. Sector-wise, electronics, power equipment, machinery, and non-bank financials attracted incremental buying in the second quarter, whereas healthcare, banking, communications, software, media, real estate, and agribusiness faced net selling. Within QFII allocations specifically, Goldman emerged with the largest aggregate market value, while Middle Eastern sovereign funds recorded the fastest value expansion. Goldman entered the top ten shareholder lists of 1,150 listed firms in Q2, holding roughly 62.144 billion yuan in shares, having newly entered 697 companies; its top 20 heavy positions totaled about 14.595 billion yuan. More than 126 individual stocks saw Goldman's holdings exceed 100 million yuan, with the top three being Siyuan Electric, Dongxin Semiconductor, and Guangzhi Technology. Its largest holding, Siyuan Electric, stood at 10.6652 million shares—ranked fifth among the firm's top ten circulating shareholders—with a circulating market value of approximately 1.845 billion yuan. On the market-cap leaderboard, UBS, BNP Paribas, Morgan Stanley, and JPMorgan followed in second through fifth places. UBS adopted a "technology plus resources" double-track strategy in Q2, appearing among the top ten shareholders of 492 A-share companies, newly entering 323 firms with combined holdings around 43.075 billion yuan. Its top 20 heavy positions totaled approximately 25.012 billion yuan, with CATL leading at roughly 10.755 billion yuan—the largest single-stock position among the notable foreign institutions tracked. BNP Paribas ranked third thanks to its heavy stake in Bank of Nanjing, holding 15 A-share companies worth a combined 24.856 billion yuan; its stake in Bank of Nanjing reached 2.243 billion shares, valued at about 22.187 billion yuan. Morgan Stanley entered the top ten shareholder lists of 355 A-share firms in Q2, holding approximately 19.879 billion yuan in aggregate market value, newly entering 281 companies with its top 20 positions totaling roughly 14.595 billion yuan. JPMorgan made appearances among the top ten shareholders of 380 A-share firms, including 253 fresh entries, with total holdings of 17.489 billion yuan and top 20 positions valued at about 6.507 billion yuan. As the two quintessential Middle Eastern sovereign funds, the Abu Dhabi Investment Authority (ADIA) and Kuwait Investment Authority (KIA) serve as key windows into regional "state team" allocation. Wind data indicate ADIA was listed among the top ten circulating shareholders of 62 A-share companies by end-Q2, with latest holdings of 23.429 billion yuan. ADIA's positions exceeded 100 million yuan in 32 stocks, with the top three being Zijin Mining, Luxshare Precision, and Wanhua Chemical. Its number-one holding, Zijin Mining, comprised 155.0333 million shares—fifth among the company's top ten circulating shareholders—worth approximately 3.897 billion yuan. KIA appeared in the top ten shareholder rosters of 15 A-share firms, with holdings totaling 2.954 billion yuan; 13 stocks exceeded 100 million yuan, with Yinlun Co. as its largest position at 8.2622 million shares, valued around 411 million yuan. In Southeast Asia, Singapore's GIC surfaced among the top ten shareholders of three A-share companies in Q2, while Brunei's Investment Agency held 10.32 million shares of CICC, worth approximately 373 million yuan.

Sector Rotation Reflects Style Migration

"Comparing the 2025 annual report and 2026 first-quarter data, Q2 QFII positioning shows several notable shifts. First, there's a pivot from 'betting on sector champions' to 'deep-diving the full supply chain.' In prior years, foreign capital pursued AI primarily through high-visibility downstream names like optical modules. Now, in Q2, institutions have pushed upstream, with specialty gases, electronic ceramics, and relay components joining heavy holdings. Rather than chasing only the most hyped stars, they now identify critical links the domestic market overlooks but overseas supply chains depend on. The rationale is direct: if the AI sector genuinely scales, upstream materials and equipment will capture tangible order dividends beyond thematic speculation," said Zhang Wei, a macro analyst at a leading Shanghai brokerage.

Zhang also highlights a dual-pronged approach: on one side, billions flow into mega-caps like CATL, creating concentrated, top-heavy positions; on the other, capital spreads broadly across small- and mid-cap niche leaders. Large positions secure core sector benchmarks while smaller allocations hunt for hidden gems, juggling both ends instead of going all-in on "big whites." This creates a structure where concentration and diversification coexist, he notes. Although QFII players maintain a long-term bullish stance on A-shares, their trading logic has evolved from buy-and-hold to active swing trading. "The old perception was that foreign funds bought a stock and sat on it for years. That's changed. Even with blue chips like CATL, they'll sell at highs and add on dips. For small- and mid-caps, we see them in the top ten shareholders one quarter, absent the next, then back again. The 'sharp spikes' in hot, speculative names often show Goldman, Citi, or UBS in the shadows, pocketing tidy profits from smaller stocks," Wang Jun remarks.

Looking ahead, QFII voices are recommending overweight positions. Multiple international banks issued research in August maintaining overweight ratings on A-shares—Goldman Sachs, Morgan Stanley, and Standard Chartered all cite compelling valuation discounts relative to global markets, alongside earnings recovery driven by new productive forces. Forecasts place A-share earnings growth near 11% for 2026, with AI hard tech and high-end manufacturing viewed as the most promising trajectories. At the same time, institutions flag risks: after the AI sector's recent run, valuation froth has been partially digested, and future gains will shift toward earnings delivery. Pure concept plays lacking order momentum are likely to be discarded by the market.