Global investors are noticing a positive shift in sentiment towards China, but significant conviction is needed for large, long-term funds to fully reinvest.
This was a key takeaway from attendees at the Milken Institute Global Investors’ Symposium in Hong Kong. The CEO of Blue Pool Capital, responsible for managing Joe Tsai’s wealth, noted a rise in the number of foreign investors, including private equity, hedge funds, and long-term investors, visiting Hong Kong. This trend is seen as crucial in elevating Hong Kong to its rightful position, as highlighted by Oliver Weisberg during a panel discussion.
Others at the event also expressed optimism. Janet Perumal, Asia-Pacific head of Wellington Management Singapore Pte, mentioned that the momentum in China’s stock market, catalyzed by the resurgence of the AI company DeepSeek, could potentially continue this year. Chinese stocks, particularly in Hong Kong, have rebounded due to government interventions to prop up the property market, boost consumption, and support private businesses. Investors have been diversifying away from the US due to increased global economic risks stemming from Donald Trump's policies.
Perumal pointed out that Chinese companies are still undervalued compared to their global counterparts, especially the US. The quality of some Chinese firms, particularly in the internet sector, is underestimated by global investors, she added, citing their superior margins and returns to shareholders.
Despite the Hang Seng Index in Hong Kong climbing nearly 18% this year, investors are cautious and seek further confirmation that this uptrend is sustainable. Big funds are adopting a wait-and-watch approach. According to Aaron Costello, Asia head at Cambridge Associates, institutional investors have yet to fully engage in the Chinese market rally, as most of the investment inflows in Hong Kong are domestic, and active managers continue to allocate less to China.
The integration of the Greater Bay Area, encompassing major Chinese cities like Shenzhen and Guangzhou, is anticipated to bring long-term benefits to Hong Kong, as highlighted by Goodwin Gaw, chairman of Gaw Capital Partners.