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The mainland Chinese stock market saw a substantial rebound in the third quarter, primarily driven by increased foreign investment in major industry and banking shares.
By the end of September, Chinese distillers Kweichow Moutai and Wuliangye, along with the insurance giant Ping An, each had over 80 foreign institutional investors, according to data from Wind Information.
More than 80 stocks listed on the mainland — including logistics company SF Holding, the original design manufacturer Luxshare Precision, the Industrial and Commercial Bank of China, and the brokerage firm Citic Securities — each attracted more than 50 foreign institutional investors as of Sept. 30, the data revealed.
In terms of investment value, battery producer Contemporary Amperex Technology, Kweichow Moutai, and home appliance leader Midea Group ranked as the top three, with holdings valued at CNY265.7 billion (approximately USD37.3 billion), CNY88.1 billion (USD12.4 billion), and CNY71.2 billion, respectively.
Financial institutions dominated the top ranks of foreign-held stocks by number of shares. As of the end of the third quarter, 32 foreign investors held nearly 2.4 billion shares of Bank of Nanjing, while 42 investors held 1.6 billion shares of Bank of Ningbo.
Looking at market capitalization, foreign investors mainly concentrated on top-tier companies. Forty-two mainland stocks had foreign holdings worth over CNY10 billion (around USD1.4 billion) as of Sept. 30, including CATL, Kweichow Moutai, Midea, Zijin Mining, Hengrui Pharmaceuticals, BYD, and Fuyao Glass Industry Group.
Foreign portfolio adjustments drew notable attention. By the end of Q3, 68 foreign institutions owned shares in China State Shipbuilding Corporation, a rise of over 40% from the end of Q2. Similar increases were seen in holdings for other companies like Kweichow Moutai, BYD, and China Yangtze Power.
Increased stakes by foreign firms were also observed in several companies. UBS raised its holdings in Anhui Ruineng Technology to become its third-largest shareholder, as reported by the Chinese battery management firm. Major investment banks such as Goldman Sachs, JPMorgan Chase, and Merrill Lynch International also appeared among the top shareholders.
Additionally, Merrill Lynch International, Goldman Sachs, JPMorgan Chase, and Morgan Stanley became new members of the top 10 shareholders of the Chinese tire manufacturer Zhongce Rubber Group, while UBS and Barclays joined the top ranks of ultrasound systems maker Chison Medical Technologies.
Despite recent market fluctuations, the medium-term outlook remains optimistic. A UBS Securities strategist indicated that demand driven by artificial intelligence and a focus on self-reliance have supported the rapid growth in the tech sector, which in turn has boosted earnings across non-financial industries. UBS projects a roughly 6% increase in the net profits of listed Chinese stocks this year compared to last.
The stock market is expected to enter a more sustainable upward phase, with key indexes forecasted to rise approximately 30% by the end of 2027. This growth is largely attributed to a structural trend of increasing capital inflows into Chinese equities, fueled by household reallocations of assets worth trillions of yuan—equivalent to hundreds of billions of dollars—according to Goldman Sachs.
Externally, the Chinese market has regained attention from global investors seeking diversification and aiming to rebalance their holdings, Goldman Sachs observed.
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