China’s Equity Market Sees Strong Revival as Tech Sector Attracts Global Investors
Global investors are showing renewed interest in mainland China’s stock markets, marking a shift after two years of hesitation. This has led to a significant increase in equity issuance, which doubled in the first quarter of 2025 compared to the same period last year. Total equity issuance in China reached $16.8 billion in the January-March period, up 119% from 2024, as investors have started to re-evaluate the country’s stock market. The improvement in sentiment is partly due to a relaxation in government scrutiny over major technology firms and the rise of innovative players like AI developer DeepSeek.
The Hang Seng Index in Hong Kong has risen by 21% this year, outperforming global peers, signaling growing confidence in China’s economic recovery. Investors are particularly drawn to Chinese stocks, which are trading at valuations around 40% lower than those in other markets. James Wang from Goldman Sachs noted that the risk perception has shifted, with investors now focusing on opportunities, particularly from long-only investors who are becoming more active. This re-rating of Chinese stocks is backed by new policies and the government’s supportive stance on emerging industries like AI.
The Chinese government’s easing of its strict regulations on the tech sector has also encouraged investor optimism. A recent summit with President Xi Jinping and top tech leaders was seen as a sign that Beijing is lessening its oversight of the industry. Furthermore, DeepSeek’s announcement of affordable AI products in January stirred global markets, and the Chinese government has indicated more support for private enterprises in high-tech sectors, including AI and quantum computing. These developments have strengthened investor confidence in China’s tech landscape.
In Hong Kong, the value of initial public offerings (IPOs) reached $1.47 billion in the first quarter of 2025, a significant increase from the previous year. A majority of upcoming IPOs in Hong Kong are expected to be secondary listings from mainland Chinese companies seeking to raise capital. Notable companies like CATL, a leading battery maker, are preparing for major listings, which are anticipated to continue driving Hong Kong’s financial market momentum. Industry experts believe that with strong regulatory support, the surge in trading activity in the Hong Kong market is likely to be sustainable.
source: Reuters