Mainland Stock Investment Guide: Taiwan Investors' Entry Strategy, Market Logic, and 2025 Planning Plan

A Delayed Awakening: Why Did the Mainland Stock Market Suddenly Heat Up

Remember a year ago? Many investors considered mainland stocks to have “no investment value.” But everything changed after the rare joint central bank press conference in September 2024.

Since rebounding from the lows of September last year, the Shanghai Composite Index has risen nearly 50% from its bottom, and by October 24, 2025, it broke through the 3950-point mark, hitting a ten-year high. This is not short-term speculation but a national effort to develop mainland stocks into a wealth reserve platform similar to the US stock market.

Currently, insurance companies and state-owned mutual funds are explicitly required to increase their stock allocations, with institutional funds continuously flowing in. What does this change mean? It suggests you might be witnessing a long-term structural opportunity.

Understanding the Basics of the Mainland Stock Market

The Roles of the Five Major Indices

To invest in mainland stocks, first understand the main reference points. The five indices each serve different purposes:

Shanghai Composite Index is the oldest, appearing in various news headlines, but honestly—it has no tradable underlying assets; it merely reflects market bullishness or bearishness.

The truly tradable indices are the other four: CSI 300 Index, CSI 500 Index, CSI 1000 Index, and SSE 50 Index. They each have corresponding ETFs and derivatives and are core tools for mainland stock trading.

Among them, the CSI 300 Index is the most critical. It is the benchmark most mainland funds focus on and the primary reference for overseas investors entering mainland stocks. Its constituent stocks are the leading companies that global investors pay close attention to. In comparison, the SSE 50 corresponds to large-cap stocks, and the CSI 1000 represents small-cap stocks.

An Overview of Mainland Stock Industry Structure

Divided by Shenwan Level 1 industries, the mainland stock market shows a dual pattern of finance and manufacturing:

The financial sector (banking at 15.87 trillion yuan, non-bank financials at 8.02 trillion yuan) controls half of the market capitalization; manufacturing includes electronics, pharmaceuticals, food, chemicals, etc., with a significant share. This structure indicates that mainland stocks are closely linked to financial policies and manufacturing prosperity.

Currently, the market cap rankings and year-to-date changes (as of October 24, 2025) are: Electronics 14.24 trillion yuan (+50.59%), Pharmaceuticals and Biologicals 7.30 trillion yuan (+19.54%), Power Equipment 7.93 trillion yuan (+39.15%), Communications 5.90 trillion yuan (+67.91%). The strong performance of technology and new energy sectors is evident.

Conversely, traditional sectors like food and beverages, real estate, and coal underperform, with food and beverages declining 5.30% this year.

Historical Patterns and Current Opportunities in Mainland Stocks

A Market Characterized by “Short Bull, Long Bear”

Although mainland stocks have only a 30-plus-year history, they have experienced multiple dramatic cycle rotations. Unlike the long slow bull market of US stocks, mainland stocks exhibit typical “sharp rises and falls, cyclical recurrence” features.

Since 2000, mainland stocks have surged multiple times driven by policy stimuli and capital influx—such as the 2009 “Four Trillion” fiscal stimulus bull market and the 2014-2015 leveraged bull. But these bull markets often ended quickly due to policy shifts or deleveraging.

Breaking down the post-2010 trend, mainland stocks can be divided into four phases:

2010-2014: After the Four Trillion stimulus (inflation, overcapacity), monetary tightening led to a prolonged downturn.

2015-2016: Crackdown on off-market financing triggered deleveraging, liquidity crises, “limit-down” trading, and the failure of circuit breakers, rapidly entering a bear market.

2022-2024 September: Economic recovery fell short of expectations, market confidence waned, and despite policy support, the market remained volatile and consolidating.

September 2024 to present: Policy shift towards support, and mainland stocks entered a recovery and upward phase.

This history teaches us that the three core drivers of mainland stocks are: liquidity, policy orientation, and fundamental strength.

Liquidity is the most direct—reducing reserve requirements, lowering interest rates, and increasing credit stimulate a bull market; raising rates and deleveraging become “killers” of the bull. Policy and institutional reforms (like the split-share structure reform, registration system reform) often trigger new market rallies. But fundamental strength determines whether a bull market can be sustained—when corporate earnings growth slows, the market struggles to perform well.

Why Do International Institutions Favor Mainland Stocks

Recently, Goldman Sachs, JPMorgan Chase, UBS, and other investment banks have issued reports with a rare consensus of optimism about mainland stocks.

Goldman Sachs’ report on October 22 states that mainland stocks are entering a more stable upward phase, with forecasts of about 30% gains in major indices by the end of 2027. They cite three driving forces:

1. AI technology reshaping profit models, with capital expenditure benefits gradually materializing
2. “Anti-involution” policies creating new space for corporate profits
3. Corporate globalization strategies demonstrating China’s manufacturing ongoing competitiveness

These factors collectively boost earnings growth rates to around 12%.

JPMorgan Chase favors leading companies in healthcare, finance, and entertainment sectors, believing their valuations remain within a reasonable historical range with significant upside potential. Goldman Sachs emphasizes that mainland stocks are undervalued relative to global markets, and with the Federal Reserve’s potential easing, valuation recovery is well supported.

However, caution is warranted: the current rise in mainland stocks is partly driven by valuation expansion rather than fundamental improvement. The MSCI China Index’s forward P/E ratio has reached 12.8x, above the ten-year average of 11x. While lower than the 22x P/E of US tech stocks in the S&P 500, this gap may reflect issues like lower profit margins for Chinese tech firms, regulatory uncertainties, early-stage industry development, and fierce industry competition.

How Should Taiwanese Investors Invest in Mainland Stocks: Two Approaches Compared

Domestic Channels: Repurchase Entrustment

The most familiar method is through Taiwanese securities firms’ repurchase entrustment services, such as Yuanta Securities, KGI Securities, and Fubon Securities. The advantage is familiarity with the process and comprehensive Chinese-language support, but fees tend to be higher.

Foreign Investment Channels: Overseas Brokers

Via Futu Securities, Tiger Securities, or international brokerage accounts. These platforms usually have lower costs and more trading options but require understanding exchange rate risks and account management requirements.

Key Factors in Choosing a Platform

Regardless of the route, pay attention to:

• Whether the platform is regulated by reputable authorities (e.g., ASIC, FCA)
• Ease of deposit and withdrawal
• Range of tradable products
• Platform usability and Chinese-language support
• Cost structure: commissions, spreads, leverage

Mainland enterprises listed in Hong Kong are also an option

If direct mainland stock investment is a concern, many quality companies are listed in Hong Kong and the US. Tencent (0700.HK), Alibaba (9988.HK), among others, are good choices, allowing you to benefit from mainland economic growth.

In-Depth Analysis of Five Representative Mainland Stocks

Based on market cap, industry prospects, ROE (Return on Equity), and other factors, the following five are worth attention:

Cambricon (Chip industry, ROE 25.21%)
Market cap: 64.3 billion yuan. Leading AI chip designer in mainland China, with rare technological advantages, in a booming industry, attracting market attention. Long-term potential is significant.

CATL (Contemporary Amperex Technology) (Power batteries, ROE 17.76%)
Market cap: 1.78 trillion yuan. Global leader in power batteries. The global energy transition and carbon neutrality trends provide a long-term growth trajectory for the entire new energy industry chain, with notable benefits.

Ningbo Bank (Banking, ROE 6.9%)
Market cap: 183.3 billion yuan. Unique governance and talent advantages; precise management of high-value clients in specific regions, with a strong moat.

Hengrui Medicine (Pharmaceuticals, ROE 9.42%)
Market cap: 435.9 billion yuan. Continuous R&D innovation capabilities stand out. In the trend of Chinese pharmaceutical industry upgrading, it possesses irreplaceable scarce value.

China Mobile (Mobile communications, ROE 8.3%)
Market cap: 1.58 trillion yuan. Monopoly-like main business provides stable cash flow and safety margin; high dividend payout offers ongoing income to shareholders.

How to Strategically Invest in Mainland Stocks: Practical Tips

Step 1: Understand your risk tolerance

While the outlook is promising, mainland stocks are volatile. Conservative investors can start with index funds or blue-chip stocks; those with higher risk appetite can focus on growth stocks.

Step 2: Build positions gradually, not all at once

Given macroeconomic uncertainties, phased entry is more rational. You can divide your investment into three stages based on market signals.

Step 3: Focus on three key sectors

• New energy and AI-related: Strategic national directions with high long-term certainty
• Financial leaders: Benefiting from supportive policies, with valuation repair potential
• Consumer upgrade sectors: Policy support and recovery will drive growth in related companies

Step 4: Set stop-losses and monitor risks

While long-term optimism remains, keep an eye on macroeconomic recovery. If corporate profits cannot support current valuations, market corrections and risks should not be underestimated.

Conclusion: Seize the Golden Era of Mainland Stocks

From being neglected to becoming hot, mainland stocks’ rise is driven by policy shifts and economic restructuring opportunities. Currently, with improving corporate earnings expectations and valuation recovery, the long-term investment value of mainland stocks is clearly rising.

But opportunities come with risks. Whether macroeconomic recovery proceeds as expected will directly impact corporate earnings and their ability to sustain current valuations. Investing in mainland stocks is not a short-term gamble but participation in building a medium- to long-term wealth reserve platform.

For Taiwanese investors, now is a good time to research and position in mainland stocks—provided you do your homework, choose suitable platforms, and develop clear strategies rather than blindly following the trend.