Summary of Key Points
This news article focuses on the discussions of top investors from China and abroad at the Bloomberg Forum in New York regarding the Chinese stock market. The main conclusions are as follows: The Chinese economy has shifted from traditional industries to new drivers of growth such as AI and advanced manufacturing, fundamentally reshaping the investment logic for A-shares; RMB assets have become a preferred choice for global asset allocation due to their risk-averse nature and low correlation with other assets; A-share valuations are significantly undervalued, and leading Chinese companies are being re-evaluated by international investors; overseas investors are shifting from betting on policy cycles to focusing on identifying fundamental strengths in individual companies; corporate earnings growth rates have become the core benchmark for current investments.
1. The Chinese Economy’s “New Engine”: AI as the Core of Growth
In the past, when analyzing the Chinese economy, people often focused on traditional sectors such as real estate and consumption. However, this is no longer the case. Zhang Yidong from Haitong International notes that traditional industries (like real estate) have stabilized at their lowest levels, with rental yields exceeding risk-free returns, indicating minimal downside risks. The real drivers of growth lie in emerging sectors, particularly AI and intelligent manufacturing chains—these are key areas where excess returns can be generated in the A-share market.
How can we tell this? The growth rate of high-tech industries in China is twice that of traditional manufacturing. Sub-sectors such as AI-enabled manufacturing and optical communications have seen year-on-year profit increases of over 50%, fundamentally changing the profitability structure of the manufacturing sector. China also has unique advantages in this area: low electricity costs (supporting data centers and computing power), a large pool of engineering talent, and a fully domesticated supply chain (from components to end products), which sets it apart from the United States, where strength lies mainly in software development. Export patterns have also changed; while China used to export footwear and textiles, it now exports AI hardware, new energy vehicles, and robots. In May, the export growth rate of machinery and electronics products reached 18%, with AI-related hardware showing particularly strong demand.
2. RMB Assets: A Global Favorite for Risk Aversion and Hedging
Despite lower yields on Chinese government bonds compared to those in the U.S., Europe, and Japan, foreign capital is still eager to buy RMB assets. Peng Song from Shanghai Pudong Development Bank identifies three reasons for this: the stable exchange rate of the RMB, its strong risk-averse properties, and its low correlation with other currencies, which helps diversify global portfolios; China’s effective inflation control and stable policies also attract long-term investment. Data supports this trend, with cross-border capital inflows reaching 62 billion yuan in May 2026, and the daily trading volume in financial markets increasing by 20 times compared to 2017, indicating improved liquidity and depth.
3. A-share Valuations: Undervalued versus Global Re-evaluation of Leading Companies
A-share valuations are much lower than those in major global markets. The price-earnings ratio of the Chinese market index is 14 times, compared to 30 times for the S&P 500 and 24 times for the Nikkei 225. Given China’s GDP growth rate of 4.5%, which outpaces that of developed economies, and moderate inflation, the undervaluation of high-quality growth stocks in the A-share market is even more pronounced.
More importantly, leading Chinese companies are breaking away from the previous “China discount” (where their valuations were lower than international peers). For example, CATL’s battery technology commands a 56% premium globally; China leads the world in AI optical module shipments for three consecutive years; and it accounts for 85% of global humanoid robot shipments. These leaders have demonstrated the technical prowess and market position of Chinese manufacturing to international investors.
4. Changing Investment Logic for Overseas Investors: From “Betting on Policies” to “Identifying Fundamental Strengths”
Leena Das from a U.S. bank notes that in the past, overseas investors focused on Tencent and Alibaba as targets, betting on policy easing or consumer demand trends, and selling their investments when prices rose (a typical short-term strategy). However, the situation has changed. International institutions recognize that China’s AI industry chain has formed an independent ecosystem that cannot be easily replaced by foreign companies like Nvidia. Therefore, the focus of investment has shifted from betting on policy cycles to identifying individual companies with potential for excess returns (i.e., “alpha”). Investor sentiment has also shifted from negative to neutral, with less reliance on the internet giants.
5. The Core Principle of Investing: Earnings Growth as the Benchmark
Louis Koo from Goldman Sachs emphasizes that corporate earnings growth rates are now the key factor in global investment, with policies and market sentiment being short-term disruptions. For instance, the South Korean stock market is expected to see earnings growth of 303% this year due to demand for AI computing power and memory chips, despite unchanged or even slightly declining valuations—this illustrates the supremacy of earnings.
The A-share market is currently volatile, but individual stocks show significant divergence, with high profits in advanced technology and export manufacturing sectors, while traditional industries are struggling. Foreign investors are focusing on three key areas: the entire AI industry chain, high-end export sectors, and companies with high dividend payouts and share repurchase programs (which increased significantly in 2026, providing stable returns).
In summary, investing in the Chinese stock market requires a shift from traditional perspectives (real estate, consumption) to new drivers of growth (AI, advanced manufacturing) and a focus on corporate earnings. RMB assets and leading A-share companies are being re-evaluated by global investors, indicating long-term potential for appreciation.