Technological innovation drawing foreign investors

Foreign institutions are showing increasing interest in China, where economic growth is driven by technological innovation and the capital market is more accessible to international investors, said industry mavens and officials.

They made such comments during the Shanghai Stock Exchange Global Investors Conference on Wednesday, which was being held for the seventh consecutive year.

Paul Bateman, chairman of JPMorgan Asset Management, said that China is "a key strategic priority" for the company, where it now manages 260 billion yuan ($36.6 billion) of assets.

China has the means and will to address the current challenges in the global market and it has a solid foundation to meet growth targets in the upcoming five years. This will be translated into public companies' increasing profitability, higher stock market investment returns, and stock market stability with a longer cycle and less volatility, he said.

With China's focus on technology, services and high-end manufacturing, Bateman believes that it is now a "good time" to further tap into the Chinese market.

While overseas investors are important participants in the A-share market, holding over 3.5 trillion yuan of shares, the improving quality of A-share companies has provided quality assets for international investors, said Li Ming, vice-chairman of the China Securities Regulatory Commission.

Over one-fourth of A-share market value is now contributed by technology companies, overtaking the combined value of banks, non-bank financial institutions and property developers. More than 90 percent of the newly listed companies are from the tech sector, he said.

Colin Purdie, global chief investment officer for public markets at Manulife Investment Management, said that China's steadfast and resilient economic growth despite geopolitical tensions, its priority on technological self-reliance which is reflected in the development of semiconductors and renewable energy, as well as the country's continued efforts in market liberalization, including simplifying the investment process and removing barriers, all point to more room for growth for foreign investors.

Opportunities can be found from bonds to equities, with the former generating attractive yields with easier access provided by the bond connect program. For long-term growth-oriented investors, they can find opportunities in Chinese equities in the pharmaceutical, healthcare, artificial intelligence, renewable energy, fintech and insurance sectors. The country's demographic changes will create opportunities in retirement planning and care services, he said.

Various "DeepSeek" moments in China have woken international investors up to the fact that the country's transitional measures taken 10 years ago have resulted in many early success stories. Combined with the incremental global wealth directed to non-US assets, global investors have changed their mindset and more global capital flow into China can be expected, said Patrick Liu, head of Neuberger Berman APAC.

Tariq Ahmad, CEO of Franklin Templeton APAC, has made his fourth trip to China this year, reflecting foreign investors' rising interest in the Chinese market. International investors do not want to under-allocate or disconnect from China, which is the world's second-largest economy and moving up the value chain to the niche and high-end sectors, he said.

Ben Zhou, co-head of Warburg Pincus China, said that they are always impressed by the innovation going on in early-stage Chinese companies. They command a lot of the engineering and manufacturing capability that cannot be replaced by other economies, he said.

Industrial concentration is advancing in China as the country enters high-quality economic growth. Some multinational companies are looking for better Chinese business partners given their global strategy changes, said Wu Yibing, CEO for Temasek China.

These have brought high-quality merger opportunities for investors all over the world, enabling them to deeply participate in the structural optimization of Chinese companies. Higher activity in mergers and acquisitions can better connect the primary and secondary markets, optimizing the market exit and value discovery channels, he said.

By further optimizing the IPO, refinancing and M&A mechanisms, more capital will be directed to frontier technologies, advanced manufacturing and future-oriented industries, said Qiu Yong, chairman of the Shanghai Stock Exchange.