China: Onshore outperformance reshapes AI exposure – HSBC

HSBC Asset Management reports that emerging market equities have been resilient in 2026, with a notable divergence between Chinese onshore and offshore markets. The MSCI China Index is down year-to-date, while the China A Index is higher, helped by its tilt to technology, industrials and materials. HSBC adds that policy support and a firmer renminbi could further aid sentiment toward Chinese assets.

Onshore China leads AI-linked gains

"Emerging market stocks have been impressively resilient in 2026. One interesting feature has been the divergence between mainland China’s onshore and offshore markets."

"Year to date, the MSCI China Index – around 80% offshore, with stocks listed mainly in Hong Kong and the US – is down 7% in local currency terms. But the China A Index, which is 100% onshore, is up 10%."

"Put simply, A-shares have outperformed on stronger expected profit growth because the sector mix is tilted towards technology, industrials, and materials – all of which offer exposure to the “hard tech” layers of AI supply chains. By contrast, the offshore tech sector is more concentrated in e-commerce and internet platforms, which haven’t performed as well this year."

"The onshore market is also generally less sensitive to external shocks, which has provided some defence against global headwinds."

"Looking ahead, mainland China’s continued policy support, diversified energy supply, and an extended US–China truce could help sentiment. A strengthening renminbi could also lift global investor interest in Chinese assets."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)