An illustration depicting an AI robot interacting with stock market candlestick chart Photo VCG
Global investors have displayed growing interest in acquiring Chinese equities, financial institutions say, partly fueled by China's push for artificial intelligence (AI) Plus initiative.
An estimate projects that the widespread AI adoption in China could ramp up more than $200 billion in inflows into the Chinese stock market.
"We expect more fundamental upside for Chinese stocks after 20 percent gains year to date. Global funds are motivated to return to China and most investors agree that the Chinese AI story is a game changer," Goldman Sachs said in its latest report.
In particular, the report pointed out that the DeepSeek moment is perhaps a game changer in terms of its impact on investors' perception of Chinese equities. At the macro level, Goldman Sachs economists estimate that AI will start raising potential growth rate in China by 2026 and provide a 0.2-0.3 percentage point uplift to annual GDP growth by 2030.
"In the equity market, we estimate that widespread AI adoption could boost Chinese EPS by 2.5 percent per year over the next decade via lower costs, higher efficiency, and new revenue opportunities, raise the fair/equilibrium valuations for China equity by 15-20 percent, and potentially usher in over $200 billion of portfolio inflows," said Goldman Sachs.
Broadly, investors' interest and engagement levels in Chinese equities are arguably at the highest since the market reached its historical peak in early 2021, read the Goldman Sachs report.
Global investors show much higher interest in China equities now, Meng Lei, China equity strategist at UBS Securities, wrote in a note sent to the Global Times.
Meng said that the improving investor sentiment has resulted in a rapid market rally in the past months, as AI and other tech innovations have boosted investor esteem.
"AI and related industries, including humanoid or industrial robots, intelligent driving, remain the most popular themes among global investors," said Meng, pointing out that after the 2025 Chinese New Year holiday, the theme of humanoid robots has driven a steady stock price rally.
According to a Morgan Stanley report sent to the Global Times on Wednesday, the year-end index target for Hong Kong market's Hang Seng index was raised to 25,800, which implies a 9 percent upside from the current market levels. The target for MSCI China was also raised by 9 percent.
And, a Morgan Stanley report also forecasted a larger exposure to the Internet and tech in the Hong Kong market.
"The A-share market does not have Internet exposure for historical reasons, making the Hong Kong market through Stock Connect a more straightforward option for those who look for AI and technology innovation and adoption plays," said Morgan Stanley.
"The trend of international capital flowing from other stocks to undervalued A-shares and Hong Kong-listed equities is evident," Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Wednesday.
Yang said that DeepSeek's AI models and Unitree's robot dance at the Spring Festival Gala boosted investor confidence which helped spark a tech rally.
"The AI era presents vast opportunities across industries, with 'AI + traditional sectors' poised to generate new investment opportunities. China has emphasized 'AI + consumer' applications, with robotics emerging as the most viable implementation path," said Yang.
UBS's Meng noted that "going forward, assuming steady progress is made toward commercialization, we think humanoid robots and industrial automation are likely to become new growth drivers for the industrial sector."
China has sought to support the development of AI-powered intelligent terminals to boost consumption.
In February, a State Council executive meeting called for enhanced efforts to promote AI-related spending and develop new consumer products, scenarios and trends, according to the Xinhua News Agency.
In this year's Government Work Report, China said the country will work to effectively combine digital technologies with China's manufacturing and market strengths under the AI Plus initiative.
"We will support the extensive application of large-scale AI models and vigorously develop new-generation intelligent terminals and smart manufacturing equipment, including intelligent connected new-energy vehicles, AI-enabled phones and computers, and intelligent robots," read the report.
At present, the application of AI has been gradually integrated with a wide range of sectors in China. According to official statistics, nearly 200 generative AI models were registered and launched for service in China by the end of 2024, with over 600 million registered end users.
