Foreign investors significantly increased their holdings in Chinese yuan-denominated stocks during the second quarter, with a notable focus on companies linked to artificial intelligence (AI) and China’s green energy sector. Data from the financial information provider Wind indicates that global fund managers collectively owned 10.1 billion shares in mainland-listed firms at the end of June, up from 7.5 billion shares recorded in the first quarter.
The total value of these foreign holdings rose by 87 percent to 272.8 billion yuan (approximately HK$318.3 billion), reflecting both increased share quantities and appreciation in stock prices. The figures are drawn from interim reports of nearly 4,000 companies listed on mainland exchanges and pertain to investors participating in the Qualified Foreign Institutional Investor (QFII) program. This scheme grants foreign investors licenses and quotas to directly invest in mainland stocks under Chinese regulatory oversight, distinct from the Stock Connect program, which allows access through the Hong Kong exchange without separate approvals.
QFII holdings are particularly influential among domestic investors, who often regard foreign investors as “smart money” and monitor their disclosed positions closely. Since the Shanghai and Shenzhen stock exchanges suspended disclosure of Stock Connect flows earlier this year, QFII positions have become a primary indicator for local investors tracking foreign portfolio adjustments.
The second quarter’s foreign investment was concentrated on technology companies and enterprises with strong earnings potential, especially in sectors such as chip manufacturing, chemicals, and hardware. Notable recipients of significant foreign capital inflows included Shengyi Technology, a producer of printed circuit boards used in AI infrastructure; Luxshare Precision Industry, an Apple supplier; and Shandong Sinocera Functional Material, a manufacturer of multilayer ceramic capacitors for AI servers and data centers. Each company saw more than 1 billion yuan in foreign purchases during the period. Correspondingly, these stocks experienced substantial gains: Shengyi’s shares climbed 225 percent, Luxshare rose 43 percent, and Shandong Sinocera surged 238 percent over the quarter.
In addition to technology players, gold producer Zijin Mining Group attracted considerable foreign interest. The company’s shares, which initially declined 23 percent between April and June, fully recovered by the end of the quarter. Investors sought gold-related assets amid concerns over US fiscal pressures, using them as a hedge and diversification from dollar-denominated holdings.
According to Wind, QFII investors were among the top 10 largest shareholders in 1,102 mainland-listed companies during the quarter. Prominent investment firms such as UBS Group, Goldman Sachs, and BNP Paribas held stakes exceeding 20 billion yuan each. These global investors maintained significant positions in companies including Shengyi Technology, Bank of Ningbo, Bank of Nanjing, and Contemporary Amperex Technology Ltd.
As of late August, Chinese regulators had approved 999 overseas investors under the QFII program. Industry participants like HSBC have expressed optimism about opportunities in China’s AI hardware sector, co-global strategy firms, and emerging consumer companies on the country’s onshore markets.