Foreign institutions express confidence in A-share market

Foreign institutions have a positive outlook on China's economic growth and the investment value of its A-share market, while the country's major stock exchanges expressed continued support for foreign institutions further expanding their footprints in the market.

In an announcement released on Sunday, the Shanghai Stock Exchange said it had recently met with representatives of eight foreign institutions and solicited their opinions on topics including further optimizing the stock connect programs and the qualified foreign institutional investors mechanism, providing easier access for foreign investors interested in the A-share market, and promoting the high-quality development of the Chinese capital market.

International investment banks and institutions are encouraged to give full play to their strengths to bridge the Chinese and global markets, and this will be part of concerted efforts to make the Chinese capital market safer and also more regulated, transparent, open, vibrant and resilient, said Shanghai Stock Exchange officials.

Foreign institutions that attended the Shanghai bourse's meeting expressed confidence and a positive outlook on China's stable economic growth and the sustainable development of the Chinese capital market.

The countercyclical adjustments of fiscal and monetary policies have been further strengthened after tone-setting meetings held since late September, releasing more positive signals on advancing economic recovery and improving China's economic resilience. Therefore, the international market's outlook on China's economic growth has been effectively improved, and overseas investors' confidence in the A-share market has been boosted, foreign institutions said at the SSE meeting.

In its 2025 outlook, investment bank Goldman Sachs holds a strategic preference for Chinese stocks, as the A-share market is less sensitive to tariff policies in developed markets or the fluctuations of the renminbi's exchange rate. Meanwhile, it expects relaxed liquidity in China to help buoy the Chinese stock market.

Goldman Sachs experts estimated that the benchmark CSI 300 Index for the A-share market will rise 13 percent in 2025, while A-share companies' average earnings per share will grow 10 percent. The increased buybacks made by listed companies will further drive up the A-share market's valuation, they said.

In its outlook for 2025, JP Morgan Asset Management showed more preference for A-share technology companies, especially those specializing in artificial intelligence and renewable resources.

In another development, the eight foreign securities brokerages, fund companies, Qualified Foreign Institutional Investor program institutions and asset managers represented at a meeting held on Saturday by the Shenzhen Stock Exchange said the long-term investment value of Chinese high-end manufacturing, information technology and consumer electronics industries has become especially noticeable.

The incremental supportive policies introduced since late September have largely stabilized market expectations and boosted international investors' confidence, said the foreign institutions, which vowed to become more deeply rooted in the Chinese market.

The Shenzhen bourse said it has made continued efforts to improve market transparency and predictability to facilitate foreign institutions' business expansion and investment, and the exchange hopes that foreign institutions, which are already important A-share market participants, can stick to long-term investment and make joint efforts to advance the sustained and sound development of the Chinese capital market.

According to data released by the State Administration of Foreign Exchange in December, inbound securities investment in China reported a net inflow of $93.1 billion in the first three quarters of 2024, marking four consecutive quarters of positive inflows.

Experts at Haitong Securities said that the A-share market, as an emerging market, is likely to provide more lucrative returns in 2025, as monetary policies around the globe have become more relaxed. Therefore, the A-share market is expected to attract around 2 trillion yuan ($273 billion) in capital inflow this year, they said.

Meng Lei, China equity strategist at UBS Securities, said that the valuation of the A-share market is expected to rise in 2025, driven by robust net capital inflows from individual investors, the continued entry of patient capital, and the return of international investors.