A soaring U.S. tech market and a growing interest in diversifying into emerging economies are prompting family offices to reconsider Chinese equities, where technology investments come at a lower price.
Shift in Investment Trends
The COVID-19 pandemic triggered two key investment shifts among family offices. First, there was a surge in interest in environmental, social, and governance (ESG) investments as families became more conscious of environmental and healthcare-related risks. Second, a significant sell-off of Chinese stocks occurred due to geopolitical tensions, concerns over human rights issues, and the origins of the virus.
Despite these concerns, many investors are now revisiting their China strategies. Tech hubs such as Hangzhou and the Pearl River Delta are producing innovations that are gaining global traction, aligning with a broader shift where wealth managers see greater value in emerging markets. The uncertainty surrounding U.S. policies is also reinforcing this trend.
“Family offices are making a comeback in China—it’s a strategic move for diversification,” says William Chow, deputy CEO of Raffles Family Office in Hong Kong.
Compared to overvalued U.S. tech stocks, Chinese companies present more attractive valuations. The development of DeepSeek, a cost-efficient AI breakthrough, has further fueled interest, demonstrating that China can compete with high-end semiconductor technology at a fraction of the cost.
For most family offices, China accounts for less than 5% of their portfolios—“far too low for the world’s second-largest economy,” Chow adds. He anticipates a gradual return of investors over the long term.
Resilient Market and Government Support
China remains too significant for investors to overlook, agrees Joseph Poon, Group Head at DBS Private Bank in Singapore. He notes that while geopolitical tensions persist, China’s economic fundamentals remain strong. Recent stimulus measures—including interest rate cuts, support for financial markets, and relaxed home-buying restrictions—signal the government’s commitment to economic growth.
These efforts are already yielding results. The Chinese stock market has been on an upward trajectory, with the MSCI China Index surging 13.9% as of mid-February 2025, far outpacing the MSCI USA Index’s 4.4% gain.
While initial market gains were driven by government stimulus, the recent surge is largely fueled by advancements in artificial intelligence (AI).
Renewed Confidence in Chinese Tech
Beijing has also demonstrated renewed support for the country’s technology sector. A high-profile meeting between President Xi Jinping and Alibaba founder Jack Ma—who previously faced government scrutiny—was seen as a symbolic reconciliation with the private sector.
“Reports of a potential Alibaba-Apple AI partnership, following DeepSeek’s breakthrough, have reignited global investor interest in China,” says Angelina Lai, Chief Investment Officer for Asia and the Middle East at St. James’s Place.
Lai will be speaking at the upcoming PWM Wealth Management Summit Asia in Singapore on March 13, 2025.
In the years following COVID-19, many investors shifted focus to India, Japan, and Southeast Asia under the “China +1” strategy—diversifying supply chains to mitigate geopolitical risks. However, this trend may be reversing as Chinese valuations look increasingly appealing and domestic consumption rebounds, evidenced by strong Lunar New Year spending.
AI and EV Disruptions Drive Growth
Raymond Ma, CIO for Hong Kong and Mainland China at Invesco, believes China’s AI-driven firms will benefit from cost efficiencies, greater computing power, and broader AI adoption across industries. He expects these advancements to trigger a re-rating of Chinese stocks.
Meanwhile, China’s electric vehicle (EV) sector, led by BYD, is disrupting global markets with affordable alternatives to Western brands, further fueling investor confidence.
Long-Term Outlook for Family Offices
While Western investors have traditionally focused on geopolitical risks when evaluating China, this mindset may be shifting. DBS’s Poon highlights the emergence of major Asian corporations with strong economic advantages and global earnings potential.
Investors should also consider broader economic trends. “The U.S. now holds a smaller share of global trade compared to 15 years ago, and 90 out of 190 countries trade more with China than with the U.S.,” Lai notes, underscoring China’s resilience against U.S. tariffs.
Despite the optimism, wealth managers caution against short-term volatility.
“Cheap valuations are attractive, but investors need clarity on how China addresses its real estate challenges,” Poon warns.
Chow at Raffles echoes this sentiment, advising patience as China’s technological innovations mature. “As fundamentals become clearer, we expect renewed interest from global investors, including family offices.”
