Bank of America’s research on 2,800 active long‑only funds shows an average re‑weighting to benchmark‑neutral for China, ending a four‑year run of underweight. The total managed exposure now sits at $562 billion, up from $527 billion a year earlier, according to strategist Nigel Tupper.
Valuations are a key driver. The MSCI China Index trades at 10.2x forward earnings—below the 10‑year average of 11.7x—making tech and AI‑related names more attractive.
Sector performance data underscores the shift. Shanghai‑listed companies posted a 17.6% rise in first‑half net income, driven largely by hardware and new‑economy firms, while property and consumer staples lagged. The CSI 300 index has fallen 11% this quarter, underscoring uneven recovery.
Portfolio managers echo the sentiment. Gary Tan of Allspring Global Investments said, “Selling pressure is nearing a floor, shifting investor focus from positioning to earnings delivery.” Rebecca Sin of Bloomberg Intelligence added that the systematic ETF underweight is likely reaching a floor.
Looking ahead, analysts expect continued selective inflows into AI‑heavy sectors. The next earnings cycle for Chinese tech giants will be crucial, with guidance expected in the next quarter. Market watchers should monitor the pace of valuation improvements for a broader rebound.