Informa's executives: Chinese stocks are one of the most certain trades for 2025

The Chinese stock market is becoming a key focus for the world's largest listed hedge fund—Man Group.

On Friday, the company's multi-strategy equity head, Edward Cole, stated that Chinese stocks are highly valuable investments, as current valuations of Chinese stocks are at historical lows, coupled with the fact that China's innovation potential in artificial intelligence is underestimated. These two factors are expected to drive a rebound in the Chinese stock market, making it one of the best-performing markets this year.

He stated:

"One of my investment bets this year is that China could become one of the best-performing markets, while the U.S. market may face significant volatility with low price returns."

Investment Logic of the Chinese Stock Market: Undervaluation and AI Innovation

Edward Cole pointed out that the high valuations of U.S. tech stocks and the intensification of China's economic stimulus measures further support the investment outlook for Chinese stocks.

He specifically mentioned the rise of Chinese AI startup DeepSeek, which has led investors to reassess the potential for technological innovation in China. DeepSeek indicates that China's technological innovation is on par with that of the U.S., but "it has not received the same level of capital support as U.S. technological advancements."

Cole believes this situation may be prevalent across many industries, as Chinese companies are urgently innovating to compete with the West, making more efficient investments with limited resources:

"They are doing more with less, and this has long been overlooked by the capital markets."

According to a trader report from Goldman Sachs, hedge funds net bought Chinese stocks last week at the highest level in over four months. Cole believes:

" Investor sentiment has currently hit rock bottom, with capital highly concentrated in the U.S. market. If we start to see some funds flowing out of the U.S., the Chinese stock market could enter a bull market."

It is noteworthy that the recent stock market rebound has benefited Hong Kong stocks more than A-shares. This may be because Hong Kong stocks focus more on the technology sector, while A-shares tend to reflect domestic consumption. Over the past year, the Hang Seng Index has surged by 55%, while the CSI 300 Index has risen by about 17%.

Cole believes this pattern may change, as China will experience a wave of consumption prosperity with deepened policy reforms, particularly in housing and social security, which will support the mass economy more than high-end consumption