Wall Street Reimagines China Strategy Amid Market Volatility and Wealth Growth
A statue of a bull in front of buildings in the Lujiazui financial district in Shanghai, China, on Tuesday, Jan. 6, 2026.
Bloomberg | Bloomberg | Getty Images
From Beijing, I provide real‑time insights into the evolving landscape of mainland China’s financial markets. In this edition of The China Connection, I explore the strategies and opportunities shaping cross‑border investment today.
The Big Story
Global investment firms are increasingly focused on mainland China, seeking exposure not only through its technology sector but also through a rapidly expanding affluent investor base.
According to Crisil Coalition Greenwich, Chinese residents with over $125,000 in bankable assets collectively hold $27 trillion in wealth, a figure that has surged to roughly four million high‑net‑worth individuals—more than quadruple the number from a decade ago.
Localization
Franklin Templeton, which oversees $1.8 trillion in assets, and ChinaAMC, which manages over 3.1 trillion yuan ($462.5 billion), signed a strategic partnership on Oct. 28 for sharing market insights and jointly developing products.
They are already developing co‑branded ETFs across Hong Kong, U.S., and European fund structures.
The collaboration is bidirectional.
“Global investors are increasingly attracted to China, while Chinese capital seeks international investment vehicles,” explained Sherrie Dai, managing director of global capital at ChinaAMC.
A separately listed ETF introduced with Franklin Templeton on Sept. 29 allocates roughly 40% to U.S. equities and 60% to Hong Kong‑listed securities.
Such products may meet Beijing’s requirement for mainland‑based investors to participate within the next six to twelve months, according to Dai. ChinaAMC is also expanding offerings for Brazilian investors to deploy into Chinese technology sectors.
Since early 2025, DeepSeek’s AI advancements and other Chinese technology milestones have drawn foreign capital. U.S. firm Roundhill Investments incorporated China‑focused themes—humanoids, memory chips, and related tech—into its thematic ETFs, though exposure has frequently occurred via derivatives.
Performance trends have been negative. Chinese equities have declined sharply this year, lagging behind their U.S. counterparts.
On the China business front, foreign financial institutions have faced setbacks. In late 2025, BlackRock terminated its three‑year‑old China Innovation Fund, which had $31.7 million in net assets. Vanguard divested its holding in a mainland China mutual fund operator to majority stakeholder Ant Group in 2023.
Peter Alexander, founder and managing director of Z‑Ben Advisors in Shanghai, attributed part of the difficulty to “micromanagement” directed from headquarters overseas.
“International firms have faltered in China primarily because they have not adapted their operations to the unique demands of the local market,” he observed.
Reducing Volatility
Capital controls, state‑centric regulation, and uneven investor communication contribute to a mainland Chinese equity market that differs markedly from the U.S. exchange.
State‑linked vehicles, colloquially called the “National Team,” frequently increase stake purchases to temper market sell‑offs.
Following reports of a recent hesitation in new Chinese listings, a senior financial regulator warned that excessive capital inflows into technology sectors can heighten leverage and divert resources from traditional industries.
While short‑term price spikes can lift markets, seasoned investors caution that rapid upside may signal overvaluation. Liqian Ren, a quantitative manager at WisdomTree, emphasized that prolonged exposure to Chinese equities is constrained by perceived risk, transforming the market into a speculative vehicle rather than a value‑focused asset class.
“In the long run, market discipline is essential. We need corrections to emerge organically from market pressures.”
Need to know
China Expands Overseas Mining Stakes, Tightening Grip on Critical Minerals
Rhodium Group reported that Chinese overseas mineral acquisitions through the first three quarters of the year set a new annual record, the highest since 2018. This expansion amplifies Beijing’s leveraged influence in U.S. trade disputes over rare earths, while the capital also demands lower tariffs for Chinese purchases of American agricultural products.
What the Democratic midterms sweep changes for U.S.-China relations
The recent transition of congressional power from the GOP to the House Democrats introduces heightened uncertainty into U.S.-China dynamics, particularly regarding Taiwan. Analysts warn that such shifts could intensify tech competition and compel Beijing and Moscow to reassess strategic postures, with Robert Kagan of the Brookings Institution noting that China may seek to test U.S. resolve if the former Trump administration is likely to exit.
Moonshot Pursues European GPU Capacity Amid U.S.-China Restrictions
Deals have been discussed this year for Moonshot to rent capacity from European cloud providers hosting Nvidia graphics processing units, a move covered by sources throughout 2025. In Asia, a recent South Korean court sentencing highlights the intensifying AI chip talent competition across the region.
Coming up
Trade data releases occur on November 10. The Citi China Conference series takes place in Shanghai and Shenzhen from November 10‑13. After the Singles Day festival wraps up on November 13, the period concludes with reports on retail sales, industrial production, and fixed‑asset investment on November 16.