Global long-term investors are making a notable comeback in Chinese markets, placing billions of dollars in recent deals after years of largely avoiding the sector. In the past week, major institutional investors—such as mutual funds and other “long-only” firms—have snapped up shares in high-profile Chinese companies, including electric vehicle giant BYD Co., bubble tea brand Mixue Group, and Baidu Inc.’s $2 billion offering of bonds exchangeable into Trip.com Group Ltd. stock.
This influx of long-term capital marks a significant shift, as these investors are seen as crucial for building stability and sustainable growth in Chinese stocks. After a prolonged slump in the market, long-term investors have been hesitant to return, but their participation now signals growing confidence in China’s economic recovery and its stock market’s future potential.
“Long-only investors have a longer investment horizon and are less likely to quickly sell shares post-IPO,” said Andy Wong, IPO leader at advisory firm SW Hong Kong. “Their involvement in the market can provide much-needed stability, especially in an environment dominated by short-term speculation.”
The most prominent deals have attracted significant participation from these investors. For example, BYD’s recent $5.6 billion share sale, the largest in Hong Kong in nearly four years, saw long-term investors commit at least $1.5 billion. Baidu’s offering, which included bonds exchangeable for Trip.com shares, also garnered strong interest, with long-only funds reportedly covering the entire deal.
“These large-scale transactions echo the activity we saw in 2021,” noted Phyllis Wang, Goldman Sachs’ head of equity capital markets for Asia (excluding Japan). This surge in investment comes amid a rally in Chinese stocks, sparked by breakthroughs in artificial intelligence, notably from companies like DeepSeek, which reshaped investor perceptions of the technology sector. These gains have been further supported by economic stimulus measures from Beijing, which have contributed to renewed investor optimism in Hong Kong-based deals.
Despite a global selloff this week, market experts remain optimistic about Chinese stocks. Citigroup recently raised its outlook for Chinese equities to “overweight,” and the Hang Seng China Enterprises Index has risen by more than 18% this year. Goldman Sachs strategists, led by Kinger Lau, have also observed increased engagement from long-only global investors in Chinese IPOs and share sales, noting a shift in investment dynamics amid growing volatility in the U.S. stock market.
Ivy Hu, head of China equity capital markets at UBS, which helped arrange BYD’s deal, pointed out that large U.S. and European investors are now returning to Chinese share offerings. This contrasts with the post-2021 landscape, when Asian investors dominated the market.
Looking ahead, the outlook for Chinese IPOs remains positive, though the pace of new deals may accelerate later this month, as many companies are currently in blackout periods ahead of earnings reports. Bloomberg Intelligence forecasts Hong Kong’s IPO market could more than double to $22 billion this year.
However, the return of global investors seems to be focused on specific, high-profile deals. In the broader Chinese equities market, mutual funds that actively pick stocks have continued to sell off Chinese shares despite the rally, according to Morgan Stanley data.
Barry Wang, a portfolio manager at Oberweis Asset Management, noted that while he’s looking into more Chinese deals this year, he remains cautious about valuations and business fundamentals, especially after a strong rally in 2025. “Overall sentiment is improving toward China,” Wang said, “but the valuation and fundamentals of individual deals will be crucial in determining whether they’re worth investing in.”
Related topics:
Australian Dollar Struggles Amid Market Caution Ahead of US NFP Report
WTI Oil Price Drops Below $66.50 Amid Surge in US Crude Stocks and New Tariffs
USD/CAD Slides Below 1.4350 as Trump Delays Canada’s Auto Tariffs
