Foreign investment favors China's AI sector; Renminbi assets continue to grow in attractiveness

Reporter Meng Ke

Currently, the global artificial intelligence (AI) industry has entered a new stage of rapid development, with AI becoming the core engine reshaping the global innovation system and driving high-quality economic growth. In this context, well-known foreign institutions like UBS are increasingly focusing on China’s AI as a long-term strategic investment, with foreign investment and financing activity in China’s AI sector continuing to rise.

Wang Ying, Chief Equity Strategist at Morgan Stanley China, stated that by 2025, both the Hang Seng Index and MSCI China Index are expected to achieve nearly 30% annual returns, significantly outperforming the S&P 500’s 17%. China offers unique investment opportunities with high technological content, attracting broad global investor attention, which enhances the market’s investability and attractiveness, leading to a qualitative leap in overall valuation levels.

Looking into 2026, Wang Ying believes that the rationale supporting renminbi assets will be even stronger. On one hand, the investment certainty of Chinese assets is increasingly evident amid global turmoil; on the other hand, the strong and irreplaceable advantages formed by China’s entire industrial chain are expected to continue increasing China’s share of global exports.

Li Changfeng, Head of Market Strategy at Lianbog Fund, also expressed a cautiously optimistic view on China’s economy. The sustained improvement in macroeconomic expansion momentum and corporate profitability remains the market’s most solid support.

Wang Ying further noted that currently, global capital allocation to Chinese assets remains relatively low, with ample room for increased investment in the future, supported by liquidity that is expected to be sustainable.

“The trend of foreign capital increasing holdings in Chinese assets will continue,” said Wang Zonghao, Head of China Equity Strategy at UBS Investment Bank, recently commenting on Chinese stock strategies. “We have observed a significant rise in investor interest in the chemical industry (potential beneficiaries of anti-inflation) and the A-share semiconductor capital equipment sector (benefiting from the domestic AI upward cycle).”

“AI remains a long-term and continuously evolving important investment theme. Given that valuations of major US tech companies are currently relatively high, investors should adopt a broader and more diversified perspective when deploying AI investments,” Li Changfeng suggested. He recommends expanding the view to the global supply chain, especially toward more attractively valued Asian hardware manufacturers. As key beneficiaries of the explosive demand for AI computing power, these companies’ current valuations offer a more cost-effective way for investors to participate.

UBS Wealth Management CIO (hereinafter “UBS”) expressed optimism about vertical applications of embodied AI, including humanoid robots, advanced driver-assistance systems, and industrial automation.

UBS explained that on one hand, breakthroughs in physical AI are accelerating the deployment of real-world scenarios. Recent advances in vision-language-action (VLA) models and computing power enable robots to understand sensory inputs and natural language commands, reliably completing complex tasks. As model capabilities improve, autonomous systems and humanoid robots are expected to gradually move from pilot phases into manufacturing and logistics applications. On the other hand, labor shortages and the reshoring of manufacturing are driving increased demand. The trend of manufacturing returning to China is accelerating automation needs, with humanoid robots expected to fill critical gaps in flexibility and adaptability in production. Embodied AI solutions present significant opportunities to address labor shortages and high labor costs. Additionally, productivity improvements and supply chain momentum are strengthening. Currently, China and the US remain the main markets for investment and deployment, but their supply chain systems are not yet fully mature. Chinese component suppliers are expanding production rapidly, and overseas manufacturers are actively developing new products. Whether it’s automotive giants or emerging Chinese electric vehicle companies, many are planning large-scale expansion of production lines. Although the industry is still in its early stages and the landscape may change significantly, as the market matures, ecosystem dominance and supply chain integration will become core competitive advantages.

“AI’s accelerated progress is opening new growth opportunities for these sectors, especially for companies with scalable platforms, strong R&D capabilities, and clear commercialization paths. As business models and technological risks evolve, selecting high-quality targets will be key,” UBS stated. The firm remains optimistic about China’s tech industry overall, with high levels of capital expenditure and strong commercialization capabilities providing ongoing momentum for Chinese AI-related companies.

Zhu Liang, Deputy General Manager and Investment Director at Lianbog Fund, believes that by 2026, as economic transformation advances, A-share companies are expected to see stronger earnings growth momentum, enhancing their long-term investment value. In terms of asset allocation, sectors such as new consumption, innovative pharmaceuticals, and technological AI should not be overlooked. Besides allocating to long-duration assets, investors can also moderately focus on assets representing future advanced productivity.