"Must invest." Morgan Stanley clearly favors A-share hard technology: Foreign capital is accelerating its return, and it's the right time for strategic allocation of Chinese assets.

From May 28th to May 29th, the Shenzhen Stock Exchange's 2026 Global Investors Conference was held in Shenzhen. The conference was themed "Capital Market and Innovation Growth - China's Opportunities under the 15th Five - Year Plan".

Shen Li, the Head of On - shore Equity Business in Greater China at Morgan Stanley (Asia) and the Chairman of Morgan Stanley Futures (China) Co., Ltd., stated that the weight and valuation of Chinese assets in international indices have long been at a significantly low level, and there has been an inflection point in foreign capital flows since this year. Meanwhile, with the accelerated return of foreign capital in 2026, international investors' perception of Chinese assets has changed - from a long - term systematic under - allocation to a "must have" mindset. Against the backdrop of nearly 900 billion yuan in AI investment and the steady increase in the export share of advanced manufacturing, the A - share market, with its characteristics of "low correlation" and "independent cycle", is becoming the top choice for global funds to diversify risks and seek diversified growth opportunities.

International Investors' Perception of China Shifts to "Must Have"

From a global macro - economic perspective, there is a striking structural mismatch between the current international market status of Chinese assets and China's economic volume. Shen Li analyzed in detail the underlying reasons and potential opportunities of this phenomenon. Data shows that China's GDP accounts for about 17% of the global total and contributes about 30% of global growth. In sharp contrast, the proportion of Chinese assets in the global equity allocation weight is only 3% - 5%.

This huge disparity indicates that global funds are still in a state of systematic under - allocation of Chinese assets overall. Specifically, global funds are under - allocated by about 1.3%, and emerging market funds are under - allocated by about 5.7%.

When exploring the reasons behind this, Shen Li pointed out that it is mainly related to the underestimation at the index level (the MSCI inclusion factor is only 20%) and the exclusion of high - quality industrial and technology assets from the index.

However, from a long - term strategic investment perspective, this structural mismatch is not a risk but rather contains a large and continuous re - allocation investment space. Market data and foreign capital trends have confirmed this judgment. Since 2026, the attitude of global capital towards the Chinese market has reached an inflection point. The capital flow trajectory shows that after foreign capital flows turned into net inflows in 2025, the return pace accelerated further in 2026. A deeper change lies in the reconstruction of investors' psychology and perception: international investors' view of Chinese assets is shifting to a "must have" mindset.

Optimistic about High - end Manufacturing and Hard - tech Companies

The core driving force behind the consensus of "must have" among foreign investors lies in the solid fundamentals of China's capital market and the booming development of new - quality productivity. Shen Li emphasized that in the long run, the strategic opportunity to allocate Chinese assets is just right.

First, the new - quality productivity represented by "AI + technology" has become the medium - and long - term core driving force for China's economic growth. Statistics show that in 2026, China's investment in AI increased by nearly 20% year - on - year, with a total investment scale of nearly 900 billion yuan. Second, China's advanced manufacturing leads the world in new energy vehicles, batteries, photovoltaics, and AI hardware, and its global export share is expected to rise to 16.5% by 2030. These industrial breakthroughs have laid a solid fundamental foundation for China's capital market.

While the fundamentals are improving, the valuation advantage of Chinese assets is still significant. Currently, the PE of MSCI China is about 12 times, lower than the average level of emerging markets. In 2026, the profit growth is 15%, and the exposure to US revenue is only 3.3%, making it the top choice for diversified investment and asset allocation.

Based on the above analysis, Morgan Stanley's China equity strategy clearly stated that it is optimistic about high - end manufacturing and hard - tech companies in the A - share market. The sub - sectors include high - end industry, artificial intelligence/semiconductors, biomedicine, new materials, as well as insurance and diversified finance. Shen Li also specifically mentioned that at this stage, due to the high correlation between the Hong Kong stock market and global assets, its performance is usually weaker than that of the A - share market, which further highlights the allocation advantage of the A - share market.

China's Capital Market Has Unique Attributes

So, how does it compare with other emerging markets? Shen Li summarized the core allocation value of China's capital market as the unique attributes of "low correlation + independent cycle + large - scale". This means that the Chinese market is not just a traditional emerging market beta but an asset class that should be separately allocated.

On the one hand, the Chinese stock market (especially the A - share market) has a long - term low correlation with major global markets and is less affected by the global macro - environment and cross - border financial fluctuations, which can effectively reduce the volatility of the global portfolio. On the other hand, China's economic and policy cycles are relatively independent and do not depend on the US dollar, global interest rates, or commodity cycles, thus forming a clear distinction from typical emerging markets such as India and Brazil.

Meanwhile, as the world's second - largest stock market, there is a mismatch between China's high weight in the MSCI Emerging Markets Index and the actual under - allocation. In the fields of technology and innovation, China has made continuous breakthroughs in artificial intelligence, electric vehicles, medicine, and automation, and these industries are regarded as important engines for future growth. In addition, the rapidly developing new - economy sectors such as consumption, technology, healthcare, and high - end manufacturing provide investors with globally scarce growth opportunities.

Shen Li believes that during the 15th Five - Year Plan period, China will continuously optimize foreign investment channels and continue to open up its capital market. This series of policy dividends will continuously improve the investability of Chinese assets, further consolidating and enhancing the long - term investment value of the A - share market as an independent sub - asset class.

Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Please verify before use. Any actions taken based on this are at your own risk.

This article is from the WeChat official account "NBD News", written by Chen Chen and published by 36Kr with authorization.