Catenaa, Sunday, December 07, 2025- China has won back global funds in a banner year for stocks, with investors anticipating further gains on the country’s AI prowess and resilience amid US tensions.
Global fund managers Amundi SA, BNP Paribas Asset Management, Fidelity International, and Man Group all expect Chinese stocks to keep rising in 2026.
JPMorgan Chase & Co. recently upgraded the market to overweight, while Gary Tan at Allspring Global Investments says the asset class is becoming “indispensable” for foreign investors.
Investor perception toward China has shifted from one of skepticism to a recognition that the market can deliver unique value through its technological advances.
The MSCI China Index has jumped about 30% this year, beating the S&P 500 Index by the most since 2017 and adding $2.4 trillion in value. With most of the inflows driven by passive funds, there’s hope that a return of active money managers can steer the next leg of the rebound.
Foreign long-only funds bought around $10 billion of shares in mainland China and Hong Kong through November this year, according to data from Morgan Stanley, in a reversal from 2024’s $17 billion outflow.
The inflow was driven entirely by passive investors, who track indexes, while active fund managers pulled out around $15 billion.
The reason is partly that many active investors, who rely on stock picking, are still unable to shake off years of anxiety over the economy’s slowdown and Beijing’s sudden crackdown across the private sector.
While authorities have adopted a more business-friendly stance this year, stimulus has fallen short of investor expectations.
Investors also point out that Chinese stocks remain cheap compared to global peers. The MSCI China gauge, which tracks shares listed on the mainland and in Hong Kong, is trading at 12 times forward earnings, compared to MSCI Asia’s 15 and S&P 500’s 22.
