JPMAM remains positive on China and Hong Kong stocks despite AI rally gap

JPMorgan Asset Management remains structurally positive on Chinese and Hong Kong equities, even though both markets have lagged Asia's artificial intelligence-led rally, according to Ayaz Ebrahim, the firm's CEO for Singapore, Southeast Asia and India.

Ebrahim said China's markets offer broad investment choice and strong liquidity despite economic headwinds. He also pointed to the country's substantial domestic investment base, which he said supports markets that function effectively.

The outlook is not without challenges. Ebrahim acknowledged that China's property sector has been difficult and that economic growth has fallen short of earlier expectations. However, he said a bottom-up approach focused on individual companies was still identifying businesses with earnings growth of 15 to 20 per cent.

Those opportunities were found in technology, healthcare and export manufacturing, according to Ebrahim. He said China's large economy and strength as an exporter continued to provide scope for identifying attractive companies.

China and Hong Kong lag regional markets

The comments followed a sharp decline in Hong Kong shares. The Hang Seng Index dropped 3 per cent to 22,934.68 on October 22, marking its weakest daily performance since March. The CSI 300, which tracks mainland blue-chip shares, had also entered a bear market after falling about 20 per cent from its June peak.

Regional markets exposed to the global artificial intelligence hardware boom performed much more strongly. By late June, Taiwan's benchmark had risen about 54 per cent for the year, while South Korea's Kospi had nearly doubled.

Ebrahim said a substantial share of international capital had moved towards South Korea and Taiwan. He nevertheless argued that Beijing's backing for Chinese technology and artificial intelligence companies could bring money back towards China.

Hong Kong could benefit because many mainland companies list there. A+H listings, involving mainland-listed companies adding Hong Kong shares, represented nearly 70 per cent of Hong Kong's initial public offering proceeds during the record first 9 months of the year, according to KPMG.

Policy and market links

China's five-year plan, unveiled in September, includes work on potentially looser listing rules for strategically important technology companies. It also covers wider secondary-listing routes and stronger connections with mainland markets.

The policy direction comes as Hong Kong and Singapore face closer competition. The 2 cities ranked third and fourth in the latest Global Financial Centres Index, separated by one point.

Ebrahim rejected the idea that the two financial centres must compete for a single pool of activity. He described the rivalry as healthy, saying Hong Kong remains closely linked to Greater China while Singapore acts as a hub for Southeast Asia and India.

J.P. Morgan Asset Management was among three firms selected by Singapore's central bank in July 2025 to share S$1.1 billion, equivalent to US$859 million, through the Equity Market Development Programme. The programme was later expanded to S$6.5 billion.

Ebrahim said the firm's allocation had been fully deployed. About half went into Singaporean equities, including technology, financial companies and real estate investment trusts. The remainder was invested across wider Asian markets.

Interest rates remain a risk

For regional equities, Ebrahim identified persistent inflation and uncertainty over interest rates as the main headwind. Higher US rates raise borrowing costs and support a stronger US dollar, conditions that have historically pressured Asian currencies and asset returns.

The US Federal Reserve raised rates in September for the first time since July 2023. The move pushed the 10-year Treasury yield above 5 per cent, its highest level since 2007, before the yield eased slightly.

Ebrahim said yields could rise somewhat further, but he expected inflation to remain contained into next year. Drawing on experience spanning the 1997 Asian financial crisis and the 2008 global banking meltdown, he urged investors to avoid panic during short-term volatility and maintain a three- to five-year perspective.

Conclusion

JPMorgan Asset Management's view remains positive on China and Hong Kong, with domestic liquidity, policy support and company-level earnings growth balancing economic and interest-rate risks.

Frequently Asked Questions

Q. What is JPMorgan Asset Management's view on China and Hong Kong stocks?

It remains structurally very positive on both markets, despite their weaker performance during the regional artificial intelligence rally.

Q. Which Chinese sectors showed earnings growth?

Technology, healthcare and export manufacturing included companies recording earnings growth of 15 to 20 per cent.

Q. How did the Hang Seng Index perform on October 22?

It fell 3 per cent to 22,934.68, its worst one-day performance since March.

Q. What supported Hong Kong's market outlook?

Mainland companies listing in Hong Kong, policy support for technology companies and stronger links with mainland markets were identified as supporting factors.

Q. What is the main risk for regional equities?

Interest-rate uncertainty caused by persistent inflation was identified as the primary headwind.

Q. How was J.P. Morgan Asset Management's Singapore allocation invested?

About half was invested in Singaporean equities, with the remainder allocated across broader Asian markets.

Q. What investment horizon did Ebrahim highlight?

He highlighted a three- to five-year horizon when dealing with short-term market volatility.