Financial Associated Press, March 20 (Editor: Liu Rui) After strong gains in the Chinese stock market since the beginning of the year, overseas financial experts, including HSBC economists, have indicated that many overseas long-term investment institutions are considering whether to re-enter the Chinese market.

Are foreign funds returning after previously exiting?

In recent years, as geopolitical tensions have intensified, many Financial Institutions have reduced their Operation scale in China or withdrawn directly from the mainland and Hong Kong markets. Due to the previous headwinds faced by the Chinese Real Estate market and the Consumer market, overseas investors' enthusiasm for the Chinese stock market had also declined.

Although the aforementioned concerns have not completely dissipated, the emergence of the DeepSeek model at the beginning of this year has forced many overseas investors to refocus on China.

"A few years ago, some said China is not suitable for investment, and many investors still hesitate to touch China," said Simon Weller, head of the Asia Global Transactions team at Freshfields Bruckhaus Deringer LLP, a multinational law firm specializing in banking and Financial Services.

"However, many global equity investors now have large teams and substantial investment portfolios in China. After having to pause their investments due to the previous environment, they are now seeking Trade opportunities... They are back now."

Since the beginning of this year, Hong Kong$Hang Seng Index (800000.HK)$It has accumulated a major increase of 20.7%.$Hang Seng TECH Index (800700.HK)$The increase has even reached 30%. Earlier this month, the new stock listed on the Hong Kong stock market $MIXUE GROUP (02097.HK)$ received more than 5,200 times the oversubscription, demonstrating the extremely high enthusiasm of investors.

Frederic Neumann, Chief Asia Economist at HSBC in Hong Kong, stated that he has noticed an increasing interest from long-term investors in China.

He stated:

The interest of Asian investors is particularly strong, and the interest of European investors is relatively positive... The sentiment of American investors may be more cautious.

The outlook of overseas funds is beginning to change.

Earlier this month, a report from Goldman Sachs stated that in its database tracking the MSCI Global Index, nearly half of the Global Funds (total assets amounting to $400 billion) have no exposure to China. The report noted that nearly 40% of the funds had previously reduced their holdings in Chinese stocks, with an average reduction of 3.3%.

Vivek Subramanyam, founder and CEO of London-based investment bank TH Global Capital, stated that advancements in AI and government efforts to promote consumption in China could attract investors who had previously avoided Chinese assets.

Investors are all speculative... Many investors who were previously bearish on China are now turning their attention back to it." He added that the previous sharp decline in the Chinese stock market has made its valuation levels very attractive.

Lu Yu, Managing Director of the Algo department of Virtus Investment Partners based in San Diego, stated that the success of DeepSeek is an important reason for their more optimistic view of the Chinese Technology Industry.

They believe that with the success of DeepSeek, the Chinese government will be able to use the technology industry as a growth engine rather than just focusing on monetary policy levers to promote economic growth.

"You will see some fundamental changes in the growth pillars of this country," she said.

The next stage will focus on the recovery of consumer spending.

Although people's views on China have undergone broader changes, experts say this transformation is still in its early stages.

Williams, founder of USA's Williams Capital Advisors, stated that after a relaxed rise in recent months, the trend in the next phase will depend on whether the Chinese government fulfills its commitment to boost domestic demand.

He said, "We have begun to hear some right messages from the Chinese government... but the future will depend on whether we can see more concrete stimulus plans."

Noiman from HSBC said that the current key issue is whether the rally of Chinese technology stocks listed in Hong Kong will spread to other companies, such as non-technology companies in the Hong Kong and A-share markets, "Whether we will see this trend shift from the technology sector will be a real test of whether China is fully worth investing in."

Editor/rice