If foreign capital flows back into China, how can broad-based ETFs be used to piece together a complete map of Chinese assets?

Ask AI · How will the return of foreign capital reshape the valuation logic of Chinese technology assets?

1. Under global volatility, why are Chinese assets more attractive?

Since March, the situation between the US and Iran has repeatedly fluctuated, coupled with rising oil prices, continuously disturbing global market risk appetite. Major stock indices have experienced significant volatility, showing an overall oscillating decline. In this context, although A-shares and Hong Kong stocks have also been impacted, they have demonstrated greater resilience, arguably “standing out uniquely.”

Figure: Performance of major global indices since March

Data source: Wind, as of March 29, 2026

This resilience actually reflects several core characteristics of Chinese assets: stability, endogenous growth, and a relatively low correlation with global assets.

Structurally, China’s economy has multiple “buffer mechanisms.” Oil and gas account for less than 30% of the energy structure, significantly below the global average. Coupled with diversified imports and the development of new energy sources, the impact of external supply shocks is effectively hedged; industrially, China has the most complete manufacturing supply chain in the world, demonstrating strong resilience in external shocks; on the demand side, policies anchored in domestic demand also provide stable support even when external uncertainties increase.

Meanwhile, changes are also happening at the technological level. AI applications are gradually being implemented, and inference costs are continuously decreasing. China’s advantages in application scenarios and market scale position it prominently within the AI industry cycle.

Against this backdrop, Chinese assets are re-entering the global capital’s radar.

2. If foreign capital flows back, how should Chinese assets “compete”?

As global funds begin reallocating Chinese assets, a more practical question is: How to construct a relatively complete Chinese equity exposure in a simpler, more effective way?

From an index perspective, a clearer answer is: CSI 300 + Hang Seng Tech.

In terms of coverage, about 77% of the free float market capitalization in the MSCI China Index can be represented by the CSI 300 and Hang Seng Tech. Among them, Hang Seng Tech, with fewer constituent stocks, accounts for over 40% of the weight, reflecting its core representation in the new economy sector.

Figure: Core weights covered by a few constituents, with Hang Seng Tech showing high representativeness

Data source: MSCI, Wind, index weight data as of 2026/3/24, industries classified according to GICS Level 1. Companies listed simultaneously in A-shares and Hong Kong stocks (dual-listed) are regarded as an extension and reflection of CSI 300 constituents in the Hong Kong market.

Structurally, this combination actually corresponds to two types of assets:

CSI 300: representing core assets of the “old economy,” such as finance, cyclical industries, and manufacturing

Hang Seng Tech: representing core assets of the “new economy,” including internet, AI, and consumer technology

Combining the two can largely cover the main growth sources of China’s economy, achieving a “not too little, not too much” allocation.

3. Why is Hang Seng Tech, the new economy segment, indispensable?

If the CSI 300 is the “foundation” of China’s economy, then Hang Seng Tech is more like the “upward growth” part of China’s economy.

From the industry chain perspective, Hang Seng Tech covers key links in the AI era, including:

Upstream: computing power and semiconductor manufacturing

Midstream: large models and cloud computing

Downstream: internet platforms, smart devices, robotics, and other applications

In other words, it has representative significance across the “computing power—model—application” three levels.

Figure: Hang Seng Tech’s leading weights in discretionary consumption and communication services, key carriers of the new economy

Data source: MSCI, Wind, index weight data as of 2026/3/24, industries classified according to GICS Level 1. Companies listed simultaneously in A-shares and Hong Kong stocks are regarded as an extension and reflection of CSI 300 constituents in the Hong Kong market.

This also means that Hang Seng Tech is not just an industry index but a compressed reflection of China’s tech industry chain.

Globally, it’s hard to find a sector with the following features: possessing world-class internet platforms, AI application scenarios; having mature business models, yet at the start of a new technological cycle. This scarcity is gradually being recognized by global investors.

4. Do Wall Street’s “big short sellers” also favor such assets?

Since March, the resilience of Chinese assets has begun to attract more attention, with some funds seeking “entry points” for allocation. A notable signal is that, on March 12, renowned Wall Street investor Michael Burry publicly expressed his views on Hang Seng Tech.

Michael Burry, a legendary figure on Wall Street, known for independent thinking and contrarian views, gained fame during the 2008 financial crisis and was the inspiration for the movie “The Big Short.” On March 12, Burry publicly wrote that he is bullish on Hang Seng Tech, stating, “Over the past few years, stocks of companies related to Hang Seng Tech have fallen sharply, but their revenues and profits have continued to grow steadily. This extreme divergence between valuation and fundamentals presents a historic investment opportunity.”

Burry’s logic is very clear: his bullish stance is based on the divergence between valuation and fundamentals.

5. What is changing in the capital landscape?

From a capital perspective, marginal changes are also worth noting.

EPFR data shows that since 2026, active foreign investment has shifted from continuous outflows to phased net inflows, indicating a turning point. This reflects a renewed interest among global funds in Chinese assets.

Figure: Phased return of active foreign capital to Hong Kong stocks since 2026

Data source: EPFR, as of March 18, 2026, in billions of USD

Meanwhile, the influence of southbound funds continues to grow. The trading share has risen above 30%, with marginal pricing power significantly enhanced. In the past 20 days, southbound funds have net inflows of about 30 billion HKD, mainly into the information technology sector, showing mainland investors’ continued willingness to allocate toward tech growth.

Figure: Recent 20-day inflow of southbound funds

Data source: Wind, as of March 27, 2026

Overall, whether from foreign or domestic capital, the marginal improvement is evident.

Summary: How to assemble a complete Chinese asset portfolio with ETFs?

From a allocation perspective, the core logic this round can be summarized in one sentence: use “CSI 300 + Hang Seng Tech” to piece together the complete structure of China’s economy. The CSI 300 provides stable earnings and an economic foundation; Hang Seng Tech offers growth potential and industry upgrading.

Against the backdrop of potential foreign capital inflows, low valuations, and ongoing industry trends, this combination can both support macro stability and participate in technological growth dividends.

For investors, rather than switching between different styles repeatedly, it’s better to build a more complete and balanced Chinese asset landscape through broad-based ETFs.

Hang Seng Tech ETF: E Fund (513010, linked fund: A class 013308 / C class 013309), as a direct index-tracking instrument, offers advantages in liquidity, fee rates, and transparency.