During the Spring Festival of 2025, the launch of DeepSeek marked a significant moment in the global technology landscape, capturing attention and signaling a shift in investments towards robotics, intelligent driving, and other advanced technological conceptsThis was more than a simple technological breakthrough; it was a catalyst for foreign capital to flow into the Chinese tech sector as international institutions began to reassess the valuations of Chinese companies, particularly in technologyInvestors exhibited renewed confidence in the Chinese market, signaling a promising future for tech assets.

Major foreign financial institutions, such as Deutsche Bank, Goldman Sachs, and UBS, started to sing praises for China's economic potential early in 2025. Deutsche Bank referred to DeepSeek's emergence as China’s "Sputnik moment," suggesting that it could lead to greater recognition of China's intellectual property and a revaluation of its assets on a global scaleGoldman Sachs held an optimistic stance on A-shares and H-shares, forecasting a near 20% rise in indexes such as MSCI China and the CSI 300 by year-end 2025. This surge in foreign investment was attributed to the relatively low valuation of Chinese assets and the enduring resilience of the Chinese economy, which has become an inviting destination for global capital.

Examining policy frameworks, it becomes evident that there is ongoing governmental support bolstering this trendThe People's Bank of China has maintained a prudent monetary policy, ensuring that liquidity remains ampleAdditionally, proactive fiscal measures have increased support for critical areas and industriesThroughout 2024, various strategies, including reserve requirement and interest rate cuts, were employed to cultivate an environment conducive to the physical economy and capital marketsInvestments in infrastructure and technological innovation were ramped up to promote structural economic adjustments and facilitate upgrade transformations.

The implementation of the new “National Nine Articles” and the adjusted “1+N” capital market policies marked significant advancements, enhancing investor protections, improving transparency in information disclosure, and increasing the overall quality of listed companies

Advertisements

Take, for instance, the efforts to refine delisting regulations, which improve resource allocation efficacy by compelling underperforming companies to exit the marketSimplified approval processes for mergers and acquisitions have encouraged resource integration and industrial upgrades, directly bolstering investor confidence and attracting capital inflow.

Moreover, industrial support policies for emerging sectors have intensifiedIn areas like artificial intelligence, renewable energy, and high-end equipment manufacturing, a plethora of supportive measures, including research subsidies, tax incentives, and industry fund backing, have been introducedSuch initiatives have propelled the rapid growth of emerging industries, enhancing the competitiveness and profitability of relevant enterprises and consequently spurring a re-evaluation of Chinese asset valuesFor example, the policy-driven growth of the new energy vehicle sector has positioned Chinese firms as key players in the global market, significantly boosting their valuations.

As the global economic landscape continues to evolve amidst uncertainty, the distinct advantages of Chinese assets are becoming increasingly apparentThe world contends with various challenges, including trade protectionism and geopolitical tensions, which have substantially impacted global economic stabilityIn contrast, the Chinese economy has demonstrated remarkable resilience and stabilityIn 2024, China's export scale surpassed 25 trillion yuan for the first time, reaching 25.45 trillion yuan, which reflects a 7.1% year-on-year increase and marks eight consecutive years of growthThe structure of China's export and import products has consistently refined, with high-technology products experiencing robust growth, and export figures for homegrown brands hitting historic highsTrends like cross-border e-commerce signify China's rising prominence in global trade, thereby creating expansive market opportunities for Chinese businesses.

Technological innovation in China is undergoing a qualitative leap, with breakthroughs in critical fields such as 5G communications, quantum computing, artificial intelligence, and renewable energy

Advertisements

The emergence of DeepSeek in 2025 has fundamentally shifted the global AI industry landscape, reinforcing China’s standing as a powerhouse of technological innovationThe accelerated growth in high-value sectors has provided global investors with a new perspective on the technical prowess and innovative capabilities of Chinese companies, driving the reassessment of asset values within the region.

At present, even though A-shares and related Chinese asset indices have experienced considerable upward trends, valuations remain relatively lowAs of February 18, 2025, the Shanghai Composite Index exhibited a price-to-book (PB) ratio of 14.37, placing it at the 28.63 percentile over the last decadeSimilarly, the CSI A500 index held a PB ratio of 14.37, aligned at the 22.75 percentile—indicative of the overall lower valuation spectrum present. (Data source: Wind)

The ongoing revaluation of Chinese assets is becoming a long-term trend, with technology growth expected to lead the chargeHowever, the recently surging sectors such as Hang Seng Tech and the computing sector in A-shares have already seen substantial gains, suggesting that risks may be increasingInvestors willing to engage in this evolving landscape may consider routes through broad-based ETFs to capitalize on the emerging investment opportunities associated with the revaluation of Chinese assets.

The new flagship broad-based A500 index, showcasing greater growth potential, has emerged as the preferred choice among next-generation broad indicesIn comparison to the traditional CSI 300 index, the A500 index has reduced weight in non-bank financials, banking, and food & beverage sectors by 12%, redistributing that weight across newer industries such as equipment manufacturing, pharmaceuticals, communications, and computingThis shift renders the A500 significantly more reflective of China's economic growth trajectory, thereby positioning it to lead in the future.

Advertisements

Advertisements

Advertisements