2 days ago
$617 Billion Fund Stampede: China Tech Is Back on the Menu
After spending much of the last year dodging China like a value trap, big-money managers are quietly changing their tune. HSBC's latest survey of nearly 300 emerging-market fundscollectively managing $617 billionshows that allocations to mainland China are climbing again, now making up nearly 28% of portfolios. That's a solid jump from 22.5% a year ago. While funds as a whole are still underweight China by 340 basis points, the gap has narrowed by 60 basis points just since April, suggesting sentiment could be stabilizing after a brutal stretch.
Warning! GuruFocus has detected 2 Warning Signs with BABA.
Part of that shift comes down to performance. Chinese equities are stringing together their fourth consecutive month of gains, helped by renewed enthusiasm around the country's AI ambitions. Generative AI optimism in early 2025 sparked a fresh rally in tech names, and investors now seem more comfortable with how Beijing is navigating Trump-era tariffs. Fund managers are selectively leaning into this recovery, raising exposure to stocks like Alibaba (NYSE:BABA), Xiaomi, and EV giant BYD (BYDDF). Alibaba in particular has been one of the top contributors to the MSCI EM index this year, signaling its rebound might be more than just noise.
But this isn't a blanket EM bet. Latin America remains a strong overweight, with MercadoLibre still a favorite across portfolios. Meanwhile, money is trickling back into South Korea following June's elections, while positions in Poland are being trimmed after a strong run. Still, the big story here is Chinaonce radioactive, now quietly clawing its way back into favor among the world's biggest stock pickers. The rotation is slow, maybe cautious. But it's happening.
This article first appeared on GuruFocus.
