Despite increased volatility in global financial markets, Chinese assets are demonstrating unique resilience and investment appeal. Multiple institutions believe that China's diversified energy structure, comprehensive industrial system, stable socio-economic environment, and deepening capital market reforms are enhancing the allocation value of Chinese assets amidst global fluctuations. The long-term positive foundation for A-shares remains solid, with structural opportunities accelerating.
Globally, international firms including Goldman Sachs and UBS have taken a clear bullish stance. Goldman Sachs' chief China equity strategist maintained an overweight strategy on A-shares and H-shares on March 31, citing Chinese companies' commitment to improving return on equity, cash returns, and earnings per share. Supported by factors such as artificial intelligence, overseas expansion, and policies addressing internal competition, overall profit growth for A and H-share markets could reach 10% by 2026.
Amid recent pressure on global risk assets, China's stock market has shown positive changes in fund flows. One securities chief economist noted that while global risk assets faced sell-offs, Chinese equity funds saw net inflows of $690 million during one week in late March. Foreign capital and passive funds were key stabilizing forces, with overseas funds injecting $1.38 billion and passive funds adding $980 million, indicating Chinese assets are gaining attention from global investors.
Another strategist emphasized stability as a hallmark of China's economy and stock market. China possesses the world's most complete industrial system, accounting for approximately 30% of global manufacturing value-added. Its manufacturing framework, combining full supply chains, efficient logistics, and cost control, is evolving from a low-cost base to a stabilizing anchor in global supply chains, demonstrating resilience during past global risk events.
Improvements in market-stabilizing mechanisms with Chinese characteristics have enhanced the stock market's risk resistance. The low correlation between Chinese assets and global markets offers diversification benefits, potentially attracting global capital. Communication with overseas long-term capital indicates foreign investors are reassessing China's rise and industrial advantages.
Another analyst pointed out that as reforms are implemented steadily in the early years of the 15th Five-Year Plan, household wealth relocation and long-term capital inflows are creating positive momentum. The concentration of A-share company disclosures for 2025 annual reports and 2026 first-quarter reports will highlight sectors with high earnings certainty and improving景气度. Data showed a 15.2% year-on-year increase in profits for industrial enterprises above a designated size in the first two months of 2026, with notable profit growth in mid-upstream raw materials and AI hardware manufacturing.
Chinese companies' fundamentals are improving steadily. Upgraded export structures and growth in high-value-added sectors are evident, with overseas revenue becoming a new profit engine. Increasing dividend payouts and share buybacks are enhancing the appeal of Chinese enterprises for long-term investors.
Institutions widely view China's economic transformation and proactive industrial progress as fundamental drivers for sustained stock market development. Artificial intelligence and energy transition are identified as two core themes, with structural opportunities in related fields accelerating.
From a valuation perspective, high-quality tech assets have become attractive. UBS Global Wealth Management's Investment Office suggested the recent market adjustment may be excessive, offering chances to buy quality Chinese AI stocks at lower valuations. The Chinese internet sector's 12-month forward price-to-earnings ratio is around 13 times, near pre-DeepSeek levels, with current valuations not fully reflecting benefits from AI investments. MSCI China Index earnings per share growth is projected at about 13% this year, with the tech sector potentially reaching 20-25%. Supportive policies for AI and tech innovation, alongside improving fundamentals, may lead to earnings, valuation, and positioning recoveries.
Long-term reassessment of Chinese asset valuations is another positive factor. The foundation for market development lies in capital market reforms driving revaluation logic. Coordinated and sustained policy signals, such as the People's Bank of China's emphasis on maintaining stable financial market operations, reinforce Chinese assets' structural advantages and policy support. Valuation cushions provide downside protection, while industrial upgrades and policy dividends offer upward momentum, highlighting safety advantages in global asset reallocation.
Goldman Sachs believes AI will remain a dominant theme in Chinese equities, particularly in areas where China holds competitive advantages globally, including power, infrastructure, AI, and supply chains related to national security. Adjusted performances of A and H-shares have been stable, offering unique diversification value.
Chinese companies are actively engaging in AI, both as infrastructure providers and end-users. Reliable power infrastructure supports AI ecosystem development, with demand for AI tokens surging significantly.
Leveraging complete supply chains, stable macro conditions, and ongoing structural reforms, Chinese assets are increasingly becoming a key destination for global capital seeking certainty. The safety attributes of Chinese assets are expected to attract growing favor from international funds.
