Today, China's A-share market witnessed a notable upswing, driven largely by a strong performance in the brokerage sector. The Shanghai Composite Index closed above 3450 points, marking a new high for the year, while the ChiNext Index surged over 3%. Total trading volume across the two exchanges expanded significantly, reflecting renewed investor enthusiasm. Foreign institutions have grown increasingly optimistic about Chinese equities, highlighting the growing attractiveness of Chinese assets. Major firms like Goldman Sachs and Nomura have expressed positive views on both A-shares and Hong Kong stocks.
Growing Confidence in China’s Market Potential
According to Choice data, as of June 25, most of China’s major stock indices have posted positive returns year-to-date. The STAR Market 100 and CSI 2000 indexes have both gained more than 10%, while the Shanghai Composite Index has risen by 3.1%—outperforming its performance during the same period last year.
On a global scale, as of June 24, Hong Kong’s markets have shown particularly strong results. The Hang Seng Tech Index and Hang Seng Index both rank among the top 10 performers across more than 40 major global market indices, with the Hang Seng Index rising to 5th place—a substantial jump from its 20th-place position a year ago.
This market recovery has been accompanied by improved investor sentiment. A recent Fidelity International survey, the 2025 Asia Pacific Investor Insights, revealed that mainland Chinese investors achieved an average investment return of 4.3% since the start of 2025, exceeding the Asia-Pacific average of 3.2%. Moreover, 74% of respondents described their current financial situation as “comfortable,” a significant increase from 2024 levels.
The survey also indicated that 50% of mainland investors are optimistic about the stock market's growth over the next 12 months, with only 16% anticipating a decline.
International Institutions Turn Bullish
This domestic optimism is echoed by leading global financial institutions. At a media briefing on June 23, Goldman Sachs China Equity Strategist Fu Si reaffirmed an overweight recommendation for both A-shares and H-shares, setting a target of 4600 points for the CSI 300 and 84 points for the MSCI China Index—implying a potential upside of around 10%.
Fu Si added that global allocators are currently heavily invested in U.S. equities at historically high levels, while allocation to Chinese assets remains near cyclical lows. This disparity, she noted, creates room for medium- to long-term capital flow back into Chinese equities, especially if macroeconomic conditions continue to improve.
Similarly, at Nomura Orient International Securities’ 2025 Mid-Year Strategy Conference, the firm’s strategy team emphasized that “given strong domestic policy expectations and a favorable liquidity environment for Asia-Pacific emerging markets under a weaker U.S. dollar, we believe Chinese equity assets will outperform overseas markets in the second half of the year.”
The team projected that the CSI 300 would achieve revenue growth of 4.5% in 2025 and 5.3% in 2026, with corresponding net profit growth of 2.8% and 6.7%. They also pointed out that declining risk-free rates have left valuations attractive relative to historical averages.
Recent reports from other international banks also indicate improving sentiment among overseas investors. Wang Zonghao, Head of China Equity Strategy Research at UBS Investment Bank, noted that feedback from recent roadshows showed increased interest in Chinese equities, with many investors acknowledging China’s relatively advantageous position.
“During two weeks of meetings in Europe and Asia, we observed growing interest in Chinese stocks. Among European investors, more have moved to a neutral stance from underweight, and some are now overweight—something we rarely saw before,” Wang stated.
He identified internet and technology sectors as particularly popular, with many investors viewing large Chinese tech companies as an ideal way to gain exposure to the AI theme. Interest has also grown in globally competitive companies and domestic firms with solid fundamentals and limited exposure to tariff risks.
Wang concluded, “Most foreign investors seem to agree that compared to many other regions, Chinese stocks are currently more resilient to external shocks, even as the economy continues its gradual recovery.” He added, however, that sustained consumption recovery or larger-scale stimulus could trigger more significant capital inflows.
Sector Performance and Foreign Investment Trends
Over the past year, high-dividend sectors—especially banking—have performed strongly. This trend has been supported not only by domestic institutional investors such as mutual funds and insurance companies but also by foreign capital. According to CITIC Securities, as of the end of the first quarter, banking was the second-largest sector held by northbound capital, with particular interest in high-dividend state-owned banks.
Nomura’s strategy team continues to favor stable dividend-paying stocks for the second half of the year, alongside selective opportunities in technology sectors such as defense, new energy, and consumer innovation.
Brokerage Sector Ignites Market Optimism
This week’s rally owes much to the strong performance of securities companies—often regarded as a barometer of market sentiment. Today, brokerages led the gains, with companies like Guide Investment, Guosheng Financial Holding, Tianfeng Securities, and Xiangcai Co. hitting the daily upside limit.
A key catalyst was the news that Guotai Junan International had become the first Chinese brokerage to receive a virtual asset trading license. This announcement sparked a broad rally across financial stocks in both Hong Kong and mainland markets.
In Hong Kong, Guotai Junan International saw its share price soar by 198%, fueling excitement across the sector.
The topic of virtual asset trading quickly became a focus within financial circles. Chen Chen, Chief Strategy Officer of Hong Kong virtual asset exchange VDX, commented: “While upgrading to a virtual asset license in Hong Kong is not exceptionally difficult, securing a competitive advantage requires comprehensive capabilities—including compliance, risk management, IT integration, exchange access, and sales system development. It truly tests a brokerage’s agility and strategic vision.”
Regarding the long-term impact of virtual asset trading approval, Chen noted: “For financial institutions, the core growth opportunity lies in capturing emerging asset trends. Virtual assets exhibit high volatility and strong wealth effects during bull markets, driving significant traffic and revenue. We’ve seen examples like Robinhood and Victory Securities, where crypto trading revenue has rapidly surpassed equity trading income.”
He added: “The institutionalization and mainstream adoption of virtual assets are still in early stages. There is substantial room for growth in exchanges, stablecoins, and brokerage services. U.S. markets have already produced several compliance-focused virtual asset firms with market caps in the tens of billions. Whether Chinese brokerages can seize this opportunity will depend on their strategic foresight and execution capabilities.”
Overseas, virtual asset services have already significantly boosted brokerage valuations. For instance, U.S.-based Robinhood Markets saw its stock price surge over 540% in the past year, largely driven by its cryptocurrency trading services. In the fourth quarter of last year, Robinhood’s transaction-based revenue reached $670 million, a year-on-year increase of more than 200%, with crypto revenue accounting for $360 million—a growth of over 700% compared to the previous year. As of June 24, Robinhood’s market capitalization stood at $72.4 billion, narrowing the gap with traditional investment banks.
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Frequently Asked Questions
Why are foreign institutions becoming more optimistic about Chinese stocks?
Global investors are increasingly attracted to Chinese equities due to relatively low valuations, policy support, and improving macroeconomic conditions. Major financial institutions like Goldman Sachs and Nomura have pointed to under-allocation by international funds and potential for cyclical recovery.
What sectors are attracting the most attention from foreign investors?
Internet and technology companies remain highly popular, particularly those with exposure to AI innovation. Additionally, high-dividend sectors like banking and select consumer and industrial companies with strong fundamentals are drawing interest.
How does the virtual asset trading license impact Chinese brokerages?
The approval allows brokerages to offer virtual asset services, potentially unlocking new revenue streams. This move aligns with global trends in digital asset adoption and could enhance competitiveness, though success depends on strategic execution and regulatory compliance.
What are the expectations for market performance in the second half of the year?
Analysts expect Chinese equities to outperform many global markets, supported by policy easing, earnings recovery, and stable dividend yields. Targets suggest potential upside of around 10% for major indices.
Is now a good time to invest in Chinese A-shares?
Many analysts believe current valuations are attractive, especially for long-term investors. However, market conditions can change rapidly, so it’s important to conduct thorough research or consult with a financial advisor.
How are virtual assets affecting traditional brokerage revenue?
In markets like the U.S., virtual asset trading has become a major growth driver, sometimes surpassing traditional equity trading in revenue contribution. This trend may repeat in Asia as regulatory frameworks mature.