19 Chinese stocks added to MSCI China Index as global investors stay bullish on Chinese assets

Global index provider Morgan Stanley Capital International (MSCI) officially released its latest quarterly review on Friday, adding 19 Chinese sci-tech stocks to the MSCI China Index, which is expected to accelerate the inflow of mainstream international funds into these dynamic Chinese companies.

Meanwhile, many international financial institutions are accelerating their investment in high-quality Chinese assets, especially in advanced and core technologies, signaling sustained enthusiasm for the country's equity market.

"We've been very long-term proponents. We've been invested in the market since decades. I myself have been investing since decades in the Chinese market, and we also advocate always a higher percentage allocation towards the Chinese market than the classical indices, which I think do underrepresent and also lead to an underownership of the Chinese market overall," said Michael Heldmann, CIO Equity at Allianz Global Investors.

The newly added constituents to the index include companies from the optical communication, computing power, and high-end manufacturing sectors.

Latest data shows that the total market value of A-shares held by qualified foreign institutional investors this year is close to 200 billion yuan (29.6 billion U.S. dollars), with sectors such as batteries and high-end communication equipment seeing net inflows of tens of billions of yuan.

In addition to traditional international investment banks, sovereign wealth funds from the Middle East with a strong focus on ultra-long-term strategic allocation have also emerged as active investors. These include the Abu Dhabi Investment Authority, the Kuwait Investment Authority, and Saudi Arabia's Public Investment Fund.

"What we need to do now is to create a more financial product to support these companies to expand their presence in each other's markets. And here we are ready to develop these products as soon as we find a partner here to cooperate," said Eduardo Bernardes, head of International Distribution at Saudi National Bank.

As a core platform bringing together Chinese sci-tech innovation companies, the Shenzhen Stock Exchange has become a key market for foreign investment this year.

"Since the beginning of this year, foreign capital has continued to flow into the Shenzhen Stock Exchange. So far, the total market value of foreign-invested stocks accounts for approximately 5.02 percent of the Shenzhen Stock Exchange's total, an increase of 1.36 percentage points from the beginning of the year. We feel clearly that international investors have greater confidence in China," said Pei Huiqi, deputy director of the International Cooperation Department of Shenzhen Stock Exchange.

19 Chinese stocks added to MSCI China Index as global investors stay bullish on Chinese assets

China has announced a stricter steel capacity swap plan to curb overcapacity and stabilize supply and demand, with the toughest measures since the swap system was established in 2014

Under the new plan, all new iron- and steel-making projects nationwide must follow a 1.5:1 nationwide replacement ratio, meaning that at least ​1.5 metric tons of old steel capacity needs to exit to build one ton of new capacity. Projects involving substantive mergers and reorganizations may apply a 1.25:1 ratio. Regional differences have been scrapped, as a unified national standard is now in place.

The 2026 rules, issued by the Ministry of Industry and Information Technology, raise replacement ratios and restrict capacity transfer between companies to accelerate the exit of inefficient production capacity. The policy aims to shut down outdated, high-energy consuming, high-pollution and low-profit smelting lines, optimize industrial layout, and encourage mergers to boost industry concentration.

"The replacement ratio has been raised to 1.5:1 across the country. Regardless of the province, adding every ton of new capacity requires the exit of ​1.5 tons of old steel capacity. The new policy eliminates the differentiated ratios under the previous rules, marking the reduction effort unprecedented in intensity," said Zhang Longqiang, president of the China Metallurgical Information and Standardization Institute.

Implementation of the replacement plan is valid for only 24 months, meaning projects must break ground within two years after they are approved, or they will risk cancellation -- a move aimed at curbing speculative hoarding of capacity, Zhang said.

The rules also tighten oversight of special processes, capping induction furnaces used for stainless steel production to prevent disguised capacity expansion.

The rules stipulate that after two years, companies will no longer be able to trade capacity quotas directly, and will only be able to obtain them through substantive mergers and restructuring.

China releases stricter steel capacity swap plan to curb overcapacity