China News Service (CNS) issued a press release here on Saturday to applaud veteran Chinese economist Hu Youwen's perspective on "Chinese assets in future", highlighting his view that Chinese assets would become a core choice for global capital allocation.
Against the backdrop of a weakening US dollar, global assets are entering an era of "rebalancing", said Hu, who is Vice President and Head of Research Institute of Guolian Minsheng Securities, noting that the attractiveness of Chinese assets was continuously growing.
As of September 30, the CSI 300 Index has risen approximately 18% year-to-date and in the first half of the year, the market value of holdings via northbound funds increased by nearly 800 billion yuan compared to the end of last year.
In offshore markets, the Hang Seng Index and the Hang Seng Tech Index have surged over 30% and 40% respectively, demonstrating a sustained rise in global capital's willingness to allocate to Chinese assets, Hu said.
The economist told CNS that China's capital market is undergoing a profound paradigm shift, pointing out that the trend would be a critical stage for China's transition from a manufacturing powerhouse to a tech powerhouse during the "15th Five-Year Plan" period.
The trend of seeking new growth drivers from "new quality productive forces" is becoming increasingly evident, with emerging pillar industries set to become new engines for economic growth during the "15th Five-Year Plan", Hu said, adding that the value-added of high-tech manufacturing of this year maintained a growth rate of over 8.5%, with particularly strong performances in frontier fields like robotics, bio-pharmaceuticals, and artificial intelligence.
Despite global demand slowdown and trade barriers, exports of the "new trio" -- new energy vehicles, photovoltaic products, and lithium batteries -- have achieved counter-trend growth, highlighting the global competitiveness of Chinese manufacturing, Hu said.
The current upswing in China's capital markets highlights the dual drivers of improved liquidity and industrial innovation and the correlation between China's macroeconomic performance and stock market returns has fallen to its lowest level since 2021, Hu said.
Since July, as Sino-US negotiations shifted focus from tariffs to technology, the ChiNext and STAR Market have become new engines of the market, Hu said, adding the capital market already completed a shift from a defensive to a growth mindset.
"Barring extreme external shocks, the market is expected to continue its stabilizing and improving trend", Hu said.
He forecast that Chinese assets would become core to global capital "rebalancing" and Chinese asset valuations remain globally competitive, despite significant gains in A-shares and Hong Kong stocks this year, Chinese asset valuations remain globally competitive.
Statistics showed emerging market fund allocation has shown a trend of shifting towards China, reflecting both the unexpected resilience of Chinese corporate profits (especially among tech leaders) and a restoration of confidence brought by the stabilization of the Chinese RMB exchange rate over the past 12 months.
Notably, allocations to Chinese assets by various investor types are not yet crowded, Hu pointed out, noting that global hedge funds and active funds still maintained relatively low allocations to Chinese stocks that suggested significant potential for future increases in positioning and allocation ratios.
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