Foreign Banks Bullish on Chinese Assets as Innovation Grows

Multiple foreign banks have expressed a strongly bullish outlook on Chinese assets, with senior executives from UBS, Morgan Stanley, HSBC, and Nomura citing China’s rapidly maturing innovation ecosystem, economic resilience, and attractive valuations as key drivers of a sustained shift in global capital flows, according to a report by Xinhua News Agency.

From ‘Whether to Allocate’ to ‘How to Allocate’

“For foreign capital, Chinese assets have shifted from ‘whether to allocate’ to ‘how to allocate,’” said Hu Zhizhi, President of UBS Group China and Chairman of UBS Securities, in comments published by Xinhua on June 20. The remark encapsulates a broader sentiment shift among global investors toward the Chinese market.

Chen Ge, Co-Head of Global Investment Banking at UBS Securities, noted that based on UBS’s participation in IPOs, private placements, and convertible bonds in the first half of 2026, both Western long-term funds — including JPMorgan and Fidelity — and Middle Eastern sovereign wealth funds such as the Qatar Investment Authority and the Abu Dhabi Investment Authority have shown active engagement in deploying Chinese assets. Many institutions participated in Hong Kong IPO cornerstone investments for the first time, accepting six-month lock-up periods that signal confidence in their chosen targets.

AI and Innovation Driving Investment

China’s deepening involvement in the global AI investment cycle is a central theme. Morgan Stanley recently raised its 2026 China economic growth forecast by 0.1 percentage points, citing China’s participation in the global AI investment cycle and sustained export momentum from electric vehicles, batteries, and new energy equipment.

Xing Ziqiang, Chief China Economist at Morgan Stanley, told Xinhua that “in the AI field, China is no longer just pursuing technological frontiers, but optimizing for deployment speed, cost efficiency, and system integration.” He added that when AI applications develop to the implementation of physical AI, China’s strong manufacturing and energy advantages will become even more prominent.

The scale of China’s AI adoption is striking. As of March 2026, China’s daily token call volume exceeded 140 trillion, up 40% from the end of 2025, according to HSBC Private Banking and Wealth Management China Chief Investment Officer Kuang Zheng. He stated that China’s AI development will continue to be driven by strong capital investment and productivity improvements, raising profit expectations across multiple industries and markets. AI opportunities are spilling over from technology to industrial, materials, utilities, and financial sectors.

Energy Resilience as a Competitive Advantage

China’s energy self-sufficiency capability emerged as a recurring theme among foreign investment figures. “China’s renewable energy power generation has exceeded 30% of total. The entire power system is both on a low-carbon transition track and shows resilience to oil and gas price shocks,” said Lu Ting, Chief China Economist at Nomura. In the AI era, the importance of high-quality and stable power supply has become even more critical.

Broader Foreign Capital Trends

The bullish sentiment from major banks is part of a wider trend. Foreign investors held over 4 trillion yuan in A-share market value as of late May 2026, according to China Securities Regulatory Commission Vice Chairman Liu Haoling, speaking at the Shenzhen Stock Exchange Global Investor Conference. Over 350 foreign institutions conducted more than 1,000 research visits to A-share companies by May 28, 2026, with a focus on semiconductor, high-end equipment, smart hardware, and innovative pharmaceutical sectors.

Goldman Sachs maintains an “overweight” rating on A-shares and predicts 14% earnings growth for 2026, while JPMorgan forecasts the MSCI China Index could rise approximately 18% by the end of the year. The 7th Qingdao Summit of Multinational Corporation Leaders, held June 15–17, attracted 322 executives from 44 countries and signed 57 projects worth $2.56 billion, further underscoring international business confidence in China, as reported by China Youth Daily and CCTV.

Room for Further Growth

Despite the renewed optimism, there remains significant headroom for foreign capital inflows. “The allocation of global actively managed funds to Chinese stocks has rebounded notably since Q4 2024, but it still has distance from the 15% peak reached in 2021. The space for foreign allocation to Chinese assets remains broad,” Chen Ge of UBS Securities said.

Looking Ahead

As China’s technological strength becomes increasingly prominent, macro policies remain stable and forceful, and financial markets open in an orderly manner, the potential for continued foreign capital allocation to Chinese assets appears substantial. The shift in sentiment from “whether” to “how” to invest in China reflects a structural change in how global investors view the world’s second-largest economy — not merely as a manufacturing hub, but as an innovation ecosystem with deepening technological capabilities and broad investment opportunities across multiple sectors.