Foreign institutions have expressed confidence in the Chinese market through concrete actions. Data released by the State Administration of Foreign Exchange on September 19 showed that cross-border funds recorded a net inflow of $3.2 billion in August 2025. According to Li Bin, Deputy Administrator and spokesperson of the State Administration of Foreign Exchange, foreign investors had a net purchase of domestic stocks and bonds in August.

A report by the Institute of International Finance (IIF) showed that foreign investors poured nearly $45 billion into emerging market stock and bond portfolios in August, the highest level in nearly a year, with funds flowing into Chinese market portfolios accounting for the major portion.

Meanwhile, foreign institutions are continuously accelerating their research pace, closely monitoring A-share companies. Since entering September, multiple renowned international institutions including Goldman Sachs and UBS have successively published positive views on Chinese assets. Foreign institutions generally believe that driven by multiple positive factors including the acceleration of RMB internationalization and corporate earnings recovery, global capital confidence in the A-share market is rapidly improving.

**Increased Frequency of Foreign Institution Research**

Wind data shows that as of September 21 this year, 729 foreign institutions have conducted a total of 6,923 research visits to A-share companies. Since September, foreign institutions have conducted over 400 research visits.

Multiple internationally renowned investment banks, asset management companies, and global hedge funds appeared on the research list. Among them, Point72 Asset Management, L.P. and Goldman Sachs (Asia) Securities Limited led in total research visits this year, with 195 and 172 visits respectively, earning the title of research "workhorses."

From recent research content, foreign institutions not only focus on listed companies' performance and R&D directions, but also show strong interest in AI application highlights, humanoid robot deployment and mass production plans, long-term evolution views on optical module technology, progress of A-share companies' Hong Kong listings, and expansion opportunities in overseas markets such as Southeast Asia and Europe.

At the same time, foreign institutions are also making actual purchases with real money.

Huatai Securities released a research report stating that under the EPFR monitoring framework for global fund flows, from September 4 to 10, active allocation-type foreign capital recorded a net inflow of 110 million yuan into Chinese capital markets, marking the fourth consecutive week of net inflows.

According to Galaxy Securities statistics, since the second quarter, foreign institutions' allocation logic has changed significantly: first, from defensive to offensive; second, driven by policy and valuation factors, mainly focusing on three major directions: high-growth technology, high-dividend assets, and high-end manufacturing.

Meng Lei, China equity strategy analyst at UBS Securities, stated that investor interest in the recent A-share market rebound has significantly increased, partly due to the rapid market rebound itself, and partly benefiting from confidence boosted by comprehensive policy easing.

Foreign institutions also sense rising interest from overseas investors during roadshows.

Laura Wang, Chief China Equity Strategist at Morgan Stanley, noted that current U.S. investor interest in Chinese stock markets is far higher than during 2021-2024, with artificial intelligence, humanoid robots, biotechnology, and new consumption becoming the most watched themes. Continued policy efforts to stabilize growth and stock markets, along with significantly improved market liquidity, will help extend the duration of the market rally.

"Due to the emergence of the domestic large language model DeepSeek and widespread attention to humanoid robots, the information technology and industrial sectors both achieved significant net inflows of northbound funds in the first and second quarters. Meanwhile, the financial sector with high dividend characteristics continues to be favored by overseas investors," Meng Lei added.

**Significantly Enhanced A-Share Attractiveness**

Since the beginning of this year, the A-share market has performed brilliantly, with major indices rising steadily and active trading. Data shows that Chinese and foreign institutional investors have been key liquidity supporters of this round of gains. Goldman Sachs Prime data shows that global hedge funds' monthly net inflows into A-shares in August reached the largest amount in recent years.

Li Changfeng, Head of Market Strategy at AllianceBernstein, stated that overseas institutional investors' continued overweighting of A-shares reflects international capital's recognition of A-share market valuation repair potential.

Goldman Sachs Research's Chief China Equity Strategist Liu Jinjin and team published views on September 18, maintaining overweight ratings for A-shares and H-shares.

Liu Jinjin stated: "Unlike last September's market movement, this round of A-share market gains has a more balanced participant structure. Domestic institutional investors including insurance, pension funds, quantitative funds, and public funds, as well as mutual funds from emerging markets and Asia-Pacific regions, have all actively participated in this rally. From a liquidity structure perspective, the health of this market rise is superior to historical levels."

Goldman Sachs believes that corporate earnings are the foundation for sustained market development, while liquidity is a necessary condition for bull market formation. Liu Jinjin mentioned that from valuation levels, most indicators show large-cap stock valuations remain in reasonable ranges, with index P/E ratios at moderate levels, meaning A-shares and H-shares still have attractive liquidity premium potential.

Li Changfeng noted that from sentiment indicators and capital flow perspectives, the market has not shown obvious overheating signs. Meanwhile, individual investor margin ratios and public fund net inflow scales remain significantly below historical peaks, indicating potential for incremental capital.

Regarding future incremental capital space, Goldman Sachs calculates that domestic institutional investors currently hold 14% of stocks. If this rises to the emerging market average of 50% or developed market average of 59%, potential buying scale could reach 32 trillion yuan or 40 trillion yuan respectively.

"Overseas investors have ample room to increase A-share positions," Meng Lei stated. As China's economy continues to recover, Chinese companies' innovation spark will help corporate fundamentals deliver earnings growth. Combined with the implementation of "anti-involution" measures, global investor confidence in the A-share market will improve. Quality companies are more likely to stand out and receive higher valuations, while technological innovation, as the core competitive advantage for Chinese companies to navigate cycles, will remain a focus for foreign institutions investing in China for some time to come.