Foreign Capital Flows into A-Shares at Record Levels, Net Buy Exceeds 200 Billion CNY in Q2, Major Wall Street Firms Bullish on China's AI Value Chain

In the second quarter of 2026, China's A-share market witnessed an unprecedented wave of foreign capital inflows. According to data cited by Glorious Way, northbound funds recorded a net buy of 208.6 billion yuan in A-shares, marking the highest quarterly net inflow since the launch of Stock Connect.

By the end of Q2 2026, the total holdings of northbound funds surpassed the 3 trillion yuan threshold for the first time in history, reaching 3.13 trillion yuan—significantly up from 2.58 trillion yuan at the end of Q1.

In terms of individual stocks, Contemporary Amperex Technology (CATL) led the list with a net buy of 55.4 billion yuan. Other companies such as Zhongwei Company, Weichai Power, Cambricon, Newishine, and Luxshare Precision also saw net buys exceeding 10 billion yuan each.

From a portfolio perspective, the top ten holdings of northbound funds are primarily concentrated in leading technology firms, including Zhongji Xuchuang, Naura Technology, Midea Group, Kweichow Moutai, Montage Technology, and China Merchants Bank.

By sector, the electronics industry emerged as the most favored by foreign investors, with its market value holdings increasing by 405.3 billion yuan in Q2—a staggering 107% quarter-on-quarter growth, far outpacing other sectors. Meanwhile, telecommunications, power equipment, and machinery sectors also saw notable capital inflows. In contrast, traditional sectors such as food and beverage, banking, and non-ferrous metals experienced a decline in holdings.

International financial institutions have recently shifted their strategies, expressing bullish views on Chinese assets, particularly in the field of artificial intelligence (AI):

Goldman Sachs: Issued a report recommending 'going long on China's AI value chain.' The firm stated that China's AI industry is entering an explosive growth phase, driven by strong government support, surging global demand, and structural capital rotation. Goldman emphasized that the current market capitalization of Chinese AI companies—around $4 trillion—is severely mismatched with their market potential, indicating substantial upside potential and not a bubble.

UBS: Believes there are clear signs of accelerating AI monetization among Chinese internet platforms. The forward P/E ratio of the MSCI China Index stands at only 10.8x, significantly undervaluing China's digital economy's ability to adopt AI.

Quantum Strategy: The research firm recently adjusted its asset allocation, explicitly advising to 'exit the U.S. tech Magnificent Seven' and strongly advocating for going long on Chinese equities benefiting from AI deployment.