https://www.agbi.com/ :GCC sovereign wealth funds have invested enthusiastically in the flotations of trophy Chinese companies like online market place Alibaba, battery maker CATL, cinemas-to-property conglomerate Dalian Wanda, and the Big Four banks.

Their allocations to Chinese equities, however, are miniscule relative to their trillion dollar exposures to Wall Street and Europe.

The flicker of Chinese equities is even dimmer in the constellation of GCC family offices. I do not know a single buy-side Chinese equities specialist among my dozens of family office owners and CIO friends in the UAE.

Even I had unconsciously internalised the mantra of CNBC’s Jim Cramer that China is “uninvestable”. After all, President Xi torpedoed the Ant IPO in Hong Kong, purged his politburo rivals, cracked down on big tech billionaires, gutted the valuations of multi-billion dollar property developers after the collapse of history’s biggest speculative real estate bubble and increased the decibel counts of threats against Taiwan, the Dragon Empire’s renegade province.

Now, in August 2026, I must concede that Chinese equities offer a relative safe haven amid the AI mania in Silicon Valley and on the Nasdaq while hot wars rage in Ukraine and the Middle East.

Why? China is the only major global economy that does not face the macro sword of Damocles that haunts the financial markets of the US, Europe and even Japan. There is little sign of soaring inflation risk premia, higher bond yields, deficit finance via epic central bank money printing sprees, and toxic, polarised political elites.

In contrast, Chinese government bond yields are a mere 1.65 percent and the RMB has actually risen 6 percent against the US dollar since the start of the Iran war. In contrast, the Indian rupee has fallen 7 percent against the greenback and Modi’s 10 year G-Sec yield is 6.5 percent now and headed higher.

China is the unloved, under-owned Cinderella of global equities

Over the past decade, China has created a bigger power grid than the US and Europe combined. As a result, it has the world’s lowest cost of electricity, capital, productive labour and more oil and gas reserves than the OECD combined. It also has the world’s largest fertiliser reserves and is a world-class supplier of EV fleets, solar panels, bullet trains, clean energy, nuclear plants and development aid to emerging markets.

China is the world’s lowest cost open source AI superpower. I believe DeepSeek and Alibaba’s 2.8 trillion parameter model will gut the monetisation strategy and nosebleed valuations of OpenAI and Anthropic over the next two years, making $2 trillion IPOs on the Nasdaq impossible.

Statistics, like Shakira’s hips, never lie but sometimes can offer a fleeting glimpse of existential reality in world finance. It is surreal that the GCC has gone gaga over the $29 trillion US economy, which represents 24 percent of global GDP and now commands 70 percent of the world’s stock market valuations.

Meanwhile, my peers ignore the $20 trillion economy of the Middle Kingdom, which represents 18 percent of global GDP but a mere 3 percent of global market cap, no typo here: 3 percent. MSCI China trades at a mere 11.8 times forward earnings at a time when US valuations are obscenely inflated on the half dozen metrics I track.

My IQ is admittedly more Densa than Mensa but I now find that the mandate from heaven from the investment Gods tells me to seek my rice bowls on the Huangpu River and not the East River in NYC or the Thames in Londinium.

For an EM investor, positioning and liquidity are far more important than valuation. So I have happily watched the leveraged hot money herds in their frenzied passage to India, Taiwan, South Korea and the Nasdaq while hedge fund flows to China are down 40 percent since Operation Epic Fury triggered the Gulf’s latest geopolitical convulsion. 

China is the unloved, under-owned Cinderella of global equities – albeit with no shortage of ugly step sisters in the CCP who deny Deng’s immortal advice that to get rich is glorious.

What to do? I avoid state-owned PRC corporate dinosaurs who cannot generate even 1 percent in return on equity or retailers who cannot hope for free cash flow when consumption slumps. Yet the Shanghai A shares market offers a treasure trove of gems with 25 percent earnings per share growth, 12 percent free cash flow yield and single digit valuations.

Shanghai A shares have a domestic investor base. There is only 4 percent foreign money in the market and no correlation to the nosebleed valuation of US indices. To the south, now that Beijing has allowed Southbound Connect traffic to resume, I expect at least $50 billion in investor flows from the mainland to galvanise the moribund Hang Seng and the Red Chips in Hong Kong.

This will disproportionately benefit the Red Chips of the digital age like Alibaba, CATL, SIMC and the insurer Ping An. This last trades at only seven times trailing earnings but will use AI to automate 70 percent of its processes for its 235 million life insurance and health policy holders.

Ping An is also the largest shareholder in HSBC, once the virtual central bank of Hong Kong when it was the Crown Colony of an empire on which the sun supposedly never set but which is now sunk in a geopolitical decline.