Investors selective about mainland stocks

By the Editorial Team · Friday, September 25, 2026

DBS Bank reports that investor focus in Chinese equities is shifting toward technology-driven sectors such as AI, advanced manufacturing, and innovative pharmaceuticals, with top companies like Contemporary Amperex Technology (CATL) leading the outlook for growth. This selective approach signals confidence in China’s equity market maturing by 2040, with projected gains in market capitalization and integration into the global AI supply chain, despite current limited foreign investment.

Investor sentiment toward Chinese equities is shifting from viewing the market as a uniform “single bet” to a more selective approach focused on individual sectors, particularly technology, according to DBS Bank (Hong Kong).

Dennis Lam, managing director and head of research at DBS, highlighted during a media briefing that the Chinese economy is expected to see technology-driven growth significantly outweigh traditional sectors such as property. Key growth areas identified include artificial intelligence (AI), advanced manufacturing, and innovative pharmaceuticals, which the bank anticipates will be central to China's economic development by 2040.

Based on a newly published report evaluating listed mainland firms, DBS identified its top 10 potential winners over the coming decades. Leading the list is Contemporary Amperex Technology (CATL), the world’s largest electric vehicle (EV) battery manufacturer. Other notable companies include BeOne Medicines, a drug developer; Alibaba Group Holding, a major e-commerce player; Semiconductor Manufacturing International Corp, a chip foundry; and Inovance, a precision automation provider. Notably, no Chinese automakers were selected, reflecting the intense competition within the country’s EV sector that has seen numerous new entrants, which Lam described as undergoing a significant shakeout likely to lead to failures among weaker firms.

DBS projects a deepening and maturation of China’s equity markets by 2040, forecasting the CSI 300 Index to more than double to 9,500 points from current levels. This growth is expected to be accompanied by an increase in the stock market capitalisation relative to GDP—a metric that remains comparatively low at 78 percent as of the end of 2025 versus 219 percent in the United States. DBS expects China’s market cap-to-GDP ratio to rise to 96 percent by 2040, though Moxy Ying, the bank’s Hong Kong and China equity market strategist, cautions that “there’s still a long way to go” for the domestic equity market to fully reflect the size and dynamism of the broader economy.

The analysis arrives amid President Xi Jinping’s visit to Washington for high-level discussions with US President Donald Trump, where AI is expected to feature prominently. The summit has drawn international investor attention, particularly regarding potential adjustments to capital flow restrictions. Currently, foreign investors hold less than 4 percent of China’s A-share market capitalisation, a stark contrast to considerably higher foreign participation in Japan, South Korea, and Taiwan.

Lam noted that one factor behind the underperformance of mainland and Hong Kong stock markets relative to regional peers is their limited integration with the global AI supply chain. Nevertheless, he stressed that the perception of China as an “uninvestable” market has recently weakened. He urged global fund managers to reassess China’s equity landscape in light of sustained technological advances in AI, robotics, and advanced manufacturing.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.