China’s Stock Market Rebounds with $50.6B Foreign Inflows Amid AI Revolution and Valuation Gaps

Bargain hunters are making a comeback in China’s equity markets. International capital poured $50.6B into Chinese stocks from Jan. through Oct. 2025 — 4x 2024’s total and the strongest in four years, per the IIF. The turnaround comes as AI excitement fueled by DeepSeek’s breakthrough model and rock-bottom valuations make Chinese tech names look like bargains compared to their US counterparts.

• Mainland investors have poured HK$1.3T (~$168.7B) into Hong Kong stocks this year, now making up about 20% of daily trading and driving most of the market’s gains.
• Morgan Stanley expects a cooler stretch ahead, with Dec. 2026 targets implying only 2–4% upside across major China indexes.

The infrastructure play: As AI valuations stretch thin, the spotlight is shifting to infrastructure. Power-equipment names jumped 10% in October, with seven of the CSI 300’s top ten gainers tied to utilities, metals producers, and energy-storage systems. BofA expects a third of China’s AI spend through 2030 to flow into these facilities, lifting copper demand (seen growing 20% annually) and aluminum stocks already up ~35%. Because in a crowded AI trade, the foundation is often the safest bet.