A growing number of global financial institutions have voiced confidence in China's market outlook, with several investment banks maintaining overweight calls on Chinese equities and foreign funds stepping up purchases.
Goldman Sachs this month reiterated its "overweight" rating on Chinese stocks, while Standard Chartered Bank, in its Global Market Outlook H2 2025, also kept an overweight stance.
"There are many factors that support our overweight allocation to China equities, including external as well as domestic forces. Externally anticipating that China would be highly vulnerable to the trade tensions, but as it turned out China has managed the situation quite well. Domestically, we are seeing more policy support to stabilize the economic growth conditions, including the recent announcement of new birth subsidies. So, as we go into the fourth quarter, we believe there should be a more policy support," said Raymond Cheng, chief investment officer of North Asia at Standard Chartered Bank.
Meanwhile, international investment banks are also increasing their holdings in China's stock market.
Goldman Sachs said hedge funds had bought Chinese equities at the fastest pace in seven weeks, making China the largest destination for net hedge fund inflows globally in August.
Data from China's State Administration of Foreign Exchange showed that overseas investors increased their holdings of onshore Chinese stocks and funds by 10.1 billion U.S. dollars in the first half of 2025.
Notably, net purchases accelerated in May and June to 18.8 billion dollars.
"As of last week, the total market value of A-shares held by foreign institutions stood at about 2.5 trillion yuan, up 8 percent from 2.31 trillion yuan at the end of last year. We also saw continued net inflows of northbound capital last week," said Zhu Bingqian, chief market strategist of Neuberger Berman (China).
Looking ahead, foreign financial institutions remain largely upbeat about the fourth quarter.
Standard and Poor Global Ratings recently affirmed China's sovereign credit rating at A+ with a stable outlook.
Analysts say the consensus among foreign investors is that China's economy has a solid foundation, multiple advantages and strong resilience, with growing drivers that support high-quality development.
Foreign capital bets big on Chinese assets amid promising market outlook
