#China #Beijing #CKGSB #Investor Sentiment #A-shares

A Positive Shift in Chinese Investor Confidence

Recent insights from the Cheung Kong Graduate School of Business (CKGSB) indicate that investor confidence in China has experienced a significant rebound during the third quarter of 2025. According to their Investor Sentiment Survey (CKISS), the recovery in sentiment is largely attributable to robust technological advancements and proactive policy measures.

The Recovery in A-shares

From August 2024 to August 2025, the Shanghai Composite Index rose by an impressive 35.7% year-on-year, while the Shenzhen Composite Index surged by 58.2%. This upward trend is a clear reflection of growing investor optimism, as evidenced by the survey results indicating that 63.1% of respondents expect A-shares to appreciate, marking a 15.6 percentage points increase since July 2024. Moreover, the anticipated return on A-shares has jumped to 1.6%, which is notable compared to earlier predictions.

University professor and survey author Liu Jing highlights that the latest surge in A-shares can be attributed more to valuation expansion rather than actual improvements in the fundamentals of listed companies. He acknowledges that while this uptick signifies a greater degree of recovered investor confidence, a sound market sustainment will demand consistency in the underlying economic conditions.

Key Drivers of Confidence

Three principal factors have catalyzed this newfound investor confidence in the stock market:
1. Policy Support: Strategic moves, such as reserve requirement ratio cuts implemented since late 2024, have released approximately RMB 2 trillion into the economy. In addition, open market operations contributed an extra RMB 1.6 trillion through the first eight months of 2025.
2. Technological Innovations: Noteworthy breakthroughs within Chinese technology firms have precipitated sector growth, particularly evident in segments like semiconductors, automation, and industrial metals, which have seen growth exceeding 60% year-on-year.
3. Trade Resilience: A shift in trade dynamics, particularly a decreased reliance on US markets, has also bolstered confidence. By July 2025, exposure to the US fell to 11.8%, down from 19.3% in 2018.

Lingering Weaknesses in Fundamentals

Despite a positive outlook, the underlying market fundamentals remain fragile. Non-financial firms have encountered sluggish growth in revenue and profits, while the real estate market continues to face challenges. As of September 2025, only 46.3% of survey participants anticipated any increase in housing prices, a drop of 6.2 percentage points from a prior survey. Liu asserts that sustained bullish trends in the market will hinge upon structural reforms focusing on transitioning from investment to consumption, technological advancements, industrial upgrades, and the encouragement of robust private-sector activity.

Insights on Gold as an Asset

Interestingly, the survey reaffirms CKGSB's historical perspective on gold as a critical investment asset. Liu emphasizes the accelerating trend toward a multipolar world, where gold’s role as a stabilizing force in the global financial landscape remains significant.

Conclusion

The Q3 2025 CKISS results paint a picture of cautious optimism within the Chinese investment sphere, reflecting a rebound in confidence that, while promising, underscores the need for deeper structural reforms to facilitate sustainable growth. Investors are advised to remain vigilant and informed about underlying market conditions and policy shifts as they continue navigating the complexities of the Chinese economy.