(Yicai) May 20 -- Several foreign institutions expressed growing confidence in China's stock markets and announced plans to gradually increase their local asset allocations during the Shenzhen Stock Exchange's annual investor conference.

China’s capital markets are steadily advancing toward higher levels of openness, attracting increased interest from foreign investors as reforms deepen, Shen Li, managing director and head of China onshore equities at Morgan Stanley, told Yicai during the SZSE 2025 Global Investor Conference.

Progress in trade negotiations between China and the United States has surpassed expectations, improving risk appetite among global investors, Shen said. “At the recently concluded Morgan Stanley China BEST Conference, over 80 percent of attendees signaled potential increases in their exposure to Chinese equities in the near future.”

“Foreign investors are returning to China,” said Wang Wei, Bank of America's local country executive. An increasing number of Asian fund managers are exploring opportunities in China, with 10 percent already making significant investments, according to the findings of a recent survey by the North American bank.

Tech Edge

China holds first-mover advantages in strategic sectors such as high-end manufacturing, smart mobility, and new energy, said Xing Ziqiang, chief China economist at Morgan Stanley. He noted that China’s artificial intelligence industry is the only ecosystem outside the US with a complete industrial chain spanning software, hardware, and real-world applications -- driving real productivity gains. Meanwhile, traditional industries are also undergoing major upgrades.

Joohee An, chief investment officer at Mirae Asset Global Investments in Hong Kong, highlighted China’s progress in technological self-reliance and innovation, which is restoring confidence among private enterprises and consumers. Continued policy support will encourage well-capitalized private firms to increase capital spending and hire more talent, helping drive consumption recovery and mitigate earnings risks, she added.

China is now better equipped than ever to manage trade frictions with the US, per An. Despite global volatility, the yuan has remained remarkably stable, reflecting growing international confidence in China’s economic fundamentals, she added.

The gradual increase in foreign asset allocations is expected to trigger a new wave of valuation re-ratings in China’s capital markets, according to the CIO of the Hong Kong arm of the South Korean asset manager.

Ian Goldin, former vice president of the World Bank and now a professor at Oxford University, emphasized that China's focus on innovation, research and development, and the development of new technologies -- alongside efforts to cultivate so-called 'new quality productive forces' -- will help raise living standards and support environmental sustainability. This positions China to meet its long-term development goals, per the globalization expert.

The term "new quality productive forces” refers to China’s ambition to transition from a growth model driven by labor, capital, and land to one based on high-tech innovation.

The SZSE 2025 Global Investor Conference, a two-day event that concluded in Shenzhen today, brought together nearly 400 overseas attendees from 19 countries and regions, including regulators, sovereign wealth funds, pension funds, and asset managers.

Editors: Tang Shihua, Emmi Laine