Investor Confidence Rebounds as China's A-Shares Soar

China's investor sentiment witnessed a notable upswing in the third quarter of 2025, as revealed by the latest Cheung Kong Graduate School of Business Investor Sentiment Survey. This positive trend in investor confidence was largely fueled by governmental policy support and strides made by Chinese tech companies, even as corporate fundamentals and the real estate sector continued to underperform.

The Shanghai Composite Index increased by 35.7% year-on-year, while the Shenzhen Composite Index experienced a 58.2% surge. Reflecting this market growth, 63.1% of respondents in September anticipated a rise in A-shares, marking a 15.6 percentage point increase since July 2024. The expected rate of return on A-shares reached 1.6%, slightly higher than in April 2025.

Three main elements drove this valuation recovery: policy initiatives, notable technological progress, and resilience in trade. The Chinese government enacted two reserve requirement ratio cuts since late 2024, releasing RMB 2 trillion, with open market operations injecting an additional RMB 1.6 trillion in early 2025. Concurrently, the technology sector, especially in semiconductors and automation, saw gains exceeding 60%. Despite these advances, underlying economic fundamentals remain fragile, signaling the necessity for comprehensive structural reforms to achieve sustained market growth, according to CKGSB's Professor Liu Jing.