Foreign investments into China’s onshore markets rose to a record high in February as DeepSeek’s technology breakthrough and doubts over US exceptionalism helped offset trade-led concern over local assets.
Inflows for Chinese securities investments jumped to a record high of US$228.1 billion ($303.9 billion) in February, as per data released by the State Administration of Foreign Exchange on Monday. After offsetting outbound flows, the net balance flipped to positive for the first time since September.
The MSCI China Index has soared 23% so far in 2025 thanks to tech innovation in the natMSCI on and President Xi Jinping’s push for economic expansion, while the S&P 500 Index has shed 3.5%. Chinese bond yields have also bounced off record low levels as bearish bets on the economy take a backseat.
“Foreigners sentiment toward Chinese assets has improved significantly,” said Ju Wang, head of greater China foreign-exchange and rates strategy at BNP Paribas in Hong Kong. “The trend of them increasing holdings of China’s stocks and bonds is likely to continue.”
The economy is already showing resilience to headwinds from President Donald Trump’s tariffs, supporting the case for investing in China. Data on Monday showed consumption, investment and industrial production in the world’s second-largest economy exceeded estimates to start the year.
Offshore institutions’ holdings of Chinese government bonds halted a five-month falling streak in February, according to Chinabond data released late Monday. Moreover, their holdings of banks’ negotiable certificates of deposits hit a record high as of end February, according to Shanghai Clearing House data.
See also: China evades Trump
Chinese equities saw investment from foreign domiciled funds of USChina$3.8 billion in February after withdrawals since November, according to a Morgan Stanley note on Mar 5.
Markets still face near-term volatility from Trump’s America First policies, said Billy Leung, investment strategist at Global X ETFs. However, “DeepSeek was a wake up call.”
