Media365
As 2025 draws to a close, Wall Street’s love affair with Chinese equities is in full swing. While the relationship between global investors and China has been a rocky one, market sentiment is now about varying degrees of bullishness.
In a panel discussion moderated by JPMorgan at the annual meeting of the Emerging Markets Trading Association earlier this month, some of the speakers said China’s stock market had undergone a shift from “uninvestable” to “irresistible”, especially in the all-important technology sector.
This is a far cry from the extreme bearishness from February 2021 to January 2024, which caused the MSCI China index – which tracks Chinese companies listed at home and abroad – and the CSI 300 index of Shanghai- and Shenzhen-listed shares to plunge 58 and 45 per cent respectively.
A series of widely circulated research reports by JPMorgan in March 2022 that described China’s internet sector as “uninvestable” had an outsize impact on sentiment. Although the word caused a furore, with the bank’s editorial staff removing it from most of the published reports, the label stuck.
Part of the problem was the lack of a positive catalyst for a recovery in Chinese asset prices. The combination of a deep cyclical and structural downturn, regulatory uncertainty, insufficient and ineffective policy stimulus and the absence of a captivating theme or trend for investors to latch on to exacerbated the deterioration in sentiment.
However, global fund managers were too bearish on China in the first place. Most paid insufficient attention to the economic and geopolitical consequences of Beijing’s prioritisation of technological self-reliance. As Morgan Stanley noted in a June report, foreign investors “spent much less time covering China since 2021/2022, which had resulted in limited knowledge of the latest breakthrough on the tech and smart manufacturing fronts”.
