In recent weeks, numerous foreign financial institutions have released optimistic market outlooks regarding Chinese assets, actively increasing their stakes in several A-shares and H-sharesAnalysts suggest that with the current policy backing, there is potential for a resurgence in Chinese demand by 2025, which could enhance both consumption and investmentThis is expected to foster a more resilient economic climate in the country.

As of January 25, 2025, the disclosure of annual reports for A-shares listed in 2024 is imminent, bringing with it the quarterly holdings of major investment institutions.

Despite this reporting lull, several A-share companies have announced share buybacks since December 2024. Notably, renowned foreign investment firms such as Morgan Stanley and Goldman Sachs have significantly increased their holdings in multiple companies, possibly setting the stage for strategic investments in 2025.

For example, Xiaoming Co., a company engaged in poultry breeding, announced on December 24, 2024, that UBS and Barclays became its eighth and tenth largest shareholders with stakes of 921,800 and 637,900 shares, respectively, as recorded on December 19.

Moreover, Xiaoming Co

is not an isolated case; another brand focused on mid-to-high-end footwear simultaneously garnered recognition from major foreign institutions such as Morgan Stanley, Goldman Sachs, and BarclaysRecent updates indicate that these three entities each hold approximately 899,700, 656,500, and 524,300 shares respectively.

In addition to these A-shares, JPMorgan Chase has been actively increasing its holdings in several H-shares, including Shunfeng Holdings and Weichai Power, citing purchases as the reason for their strategy adjustments.

On December 23, 2024, JPMorgan purchased 1.344 million shares of Shunfeng Holdings at an average price of HKD 34.8 per share, increasing its holdings from 17.44% to 18.23%—a total investment exceeding HKD 46 million

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Earlier, on December 19, it purchased another 1.2906 million shares at HKD 33.25 per shareNotably, on the same day, JPMorgan acquired approximately 1.3674 million shares of Weichai Power at an average price of HKD 11.76.

JPMorgan also bought 925,000 shares of Flat Glass at HKD 11.64, raising their holdings in this stock to 9.17%. They also increased their position in Qingdao Beer, adding over 420,000 shares at HKD 55.20, which lifted their stake from 4.99% to 5.05%.

Moreover, institutions like BlackRock and BNY Mellon have ramped up their bullish positions in several Chinese stocks last week, including Industrial and Commercial Bank of China, Minsheng Bank, Sinopec, and Meituan, indicating a strong preference for dividend stocks and consumer-related companies.

For instance, on December 23, 2024, BlackRock increased its holdings in ICBC by 155 million shares, changing its stake from 4.89% to 5.07%. On the same day, it also raised its layer in Minsheng Bank by 10.415 million shares, elevating it from 4.97% to 5.09%. Highlighting the bullish sentiment, Liu Yonghao bought 21.73 million shares of Minsheng Bank at HKD 3.24, increasing his stake from 3.45% to 3.71%.

Overall, the companies favored by foreign institutions tend to be positioned in sectors known for dividends, such as banking, energy, utilities, and metals, alongside consumption-related industries

These sectors have emerged as focal points of interest for foreign investments.

Recently, various foreign financial institutions have also articulated their market prospects for A-shares and H-shares, with a particular inclination towards sectors associated with consumption and dividendsLooking ahead, it seems likely that the Chinese market will increasingly center on policy expectations and industry dynamics, which will yield structural opportunitiesOverall, the sentiment remains cautiously optimistic.

According to Shenyu Fei, Chief Equity Investment Officer at BlackRock, there’s a strong outlook for rising consumer demand and opportunities linked to a valuation shift in traditional consumption, as well as valuation opportunities in high-dividend assets as we approach year-end.

Jochen Breuer, a fund manager at Fidelity International, added that for investors keen on the Asian market in 2025, the consumer staples sector presents promising recovery opportunities that could lead to a resurgence in equity valuations driven by increased profitability and appealing dividend rates.

Regarding the outlook for the A-share market in 2025, Fidelity noted that recent data reveals a resurgence in real estate sales, increased market activity, and a steady rise in the manufacturing PMI, cultivating a positive sentiment

With policy support, confidence in the macroeconomic landscape and capital markets for 2025 remains optimistic.

Morgan Asset Management further stated that high-quality A-share companies are likely to witness a "Davis Double-Trigger" effect in 2025, realizing both valuation recovery and performance growth, as counter-cyclical adjustment policies are pushed forward, bringing some companies into a cycle of positive growth.

Against this backdrop of growing foreign confidence in Chinese assets, investing in A-shares and H-shares could yield substantial returns.

(The mentioned stocks are merely examples for analysis and not investment advice.)