South Korean investors are eagerly buying Chinese assets: their favorites are "HALO" and emerging sectors

Amid increasing volatility in global capital markets and escalating geopolitical risks, Chinese assets, with their unique “cost-performance” advantage, are attracting the attention of many overseas investors.

According to SEIbro, a subsidiary of Korea Securities Depository (KSD), in the past month, Korean investors have been net buying A-shares in major companies such as Sany Heavy Industry, China Power Construction, Changdian Technology, Guangxun Technology, Meihua Biological, Ganfeng Lithium, and XJ Electric, with net purchase amounts of no less than $1 million each.

It is worth noting that related ETFs are also on the shopping list of Korean investors. Over the past month, the Guolian An CSI All-Share Semiconductor Products and Equipment ETF and Huaxia CSI Semiconductor Chips ETF have ranked among the top in net purchase amounts by Korean investors.

Focusing on “HALO” assets and emerging sectors

From the investment trends of Korean investors over the past month, Chinese “HALO” assets and emerging sectors such as semiconductors are highly favored.

SEIbro data shows that in the past month, Korean investors have shown strong interest in industry leaders like Sany Heavy Industry, China Power Construction, and XJ Electric. Among them, Sany Heavy Industry ranks first with a net purchase of over $6.3 million, China Power Construction’s net buy exceeds $4.4 million, and XJ Electric’s net purchase is no less than $1.3 million.

Traditional industrial leaders, also known as “HALO” assets, are among the top buys by Korean investors. These assets are difficult to be replaced under the wave of AI technology and serve as foundational infrastructure for energy transition, grid upgrades, and high-end manufacturing, maintaining high economic activity.

A recent report from CITIC Securities states that “HALO” assets essentially represent a one-time survival premium revaluation of low substitute risk assets. However, “HALO” does not equate to structural winners. Defensive allocations based solely on survival certainty cannot form a long-term mainline. Assets with sustainable excess return potential should be located at critical nodes of AI expansion, deeply linked to resource bottlenecks or technological upgrades, and possess profit elasticity.

Stocks related to the tech sector are also favored by Korean investors. Data shows that leading domestic semiconductor packaging and testing company Changdian Technology and optical module leader Guangxun Technology each received net purchases of no less than $1.5 million over the past month.

Meanwhile, Korean investors are also highly interested in assets related to the robotics industry. According to the latest data from Korea Exchange (KRX), among the seven humanoid robot-themed ETFs listed in Korea, the funds investing in Chinese companies are roughly on par with domestic Korean funds.

In early March this year, Xingdong Jiyuan, an embodied intelligence company, announced the completion of a strategic round of financing totaling 1 billion yuan. Tianyancha shows that this round was jointly invested by Samsung, Gaocheng Investment, Singapore Telecommunications, Woori Capital (a subsidiary of Korea Woori Financial Group), CICC Porsche, SMIC Juyuan, Fenghe Capital, Xichuang Venture Capital, GFQianhe, Hongrui Group, and others, with additional investments from Dinghui VGC, Qingkong Tiancheng, and other shareholders.

Liu Youhua, Director of Wealth Research at PAI PAI Network, told reporters that in recent years, Korean investors have focused on China’s AI and robotics sectors mainly for three reasons: first, the growth potential and valuation attractiveness of the industry. China has a complete industrial cluster and clear policy dividends in these fields, with significant growth prospects. Additionally, related assets are undervalued historically, offering high cost-performance compared to markets like Korea. Second, there is strong industrial complementarity. Korea has advantages in materials and precision manufacturing, which can deeply integrate with China’s large application markets and supply chains, allowing Korean capital to share growth benefits from industry synergy. Third, the investment environment has improved. The stability of the RMB exchange rate has enhanced asset attractiveness.

Using ETFs to access emerging sectors

As domestic investment channels continue to diversify, more overseas investors are using ETFs to quickly allocate high-quality A-share assets.

Among the securities with the highest net purchase amounts in the past month, the Guolian An CSI All-Share Semiconductor Products and Equipment ETF and Huaxia CSI Semiconductor Chips ETF had net purchases of $1.2772 million and $860,480 respectively, ranking eighth and tenth.

In the robotics sector, two ETFs listed in Korea tracking Chinese robots are Tiger China Humanoid Robot ETF and Kodex China Humanoid Robot ETF. The former mainly invests in the robot supply chain, including motors, sensors, actuators, and control systems; the latter focuses on companies involved in robot development, motion control systems, and automation technology.

ETFs significantly reduce stock selection difficulty. A single thematic ETF can bundle a basket of industry leaders with one click, solving the problem of limited research on individual A-shares by foreign investors and enabling efficient diversified allocation. Liu Yan, Chairman of Anjue Assets, told reporters that ETFs can lower cross-border investment barriers from multiple dimensions, providing a convenient way for foreign investors to access key Chinese sectors. ETFs do not require overseas investors to open separate A-share accounts or handle complicated currency exchange procedures; they can trade directly through local brokers or via interconnection mechanisms, with fund managers handling currency conversion, avoiding account and forex barriers, and reducing transaction time and costs.

At the same time, ETFs have low minimum investment thresholds. Foreign investors can start with a small amount of capital and use sector-specific ETFs to quickly access Chinese high-tech and other related targets, avoiding the risks and pressures of investing in individual stocks.

Moreover, ETFs are managed and rebalanced by fund managers, which addresses the limited understanding foreign investors may have of individual A-shares, reducing research and stock-picking barriers, and greatly decreasing information asymmetry. Their low management and custody fees, combined with support for intraday trading, further help control transaction costs and improve capital efficiency, making cross-border investment in A-shares easier for foreign investors.

Chinese assets’ “cost-performance” stands out

In the context of increased volatility in global capital markets and rising geopolitical risks, Chinese assets’ “cost-performance” is increasingly prominent.

Liu Youhua believes that although the A-share and Hong Kong markets have recovered to some extent in recent years, the main indices’ P/E ratios remain low, while sectors like technology and manufacturing are expected to see strong earnings growth by 2026, creating an attractive combination of “low valuation + high profit growth.” Additionally, sectors representing “new productive forces,” such as AI, robotics, and innovative medicine, benefit from clear industrial policies and long-term barriers to development, making them valuable for long-term allocation.

Korean investors’ continued focus on China’s AI and robotics sectors is driven by China’s comprehensive advantages in these industries. Liu Yan states that China and Korea are highly complementary in many industries. Korean investors find it easy to understand Chinese corporate investment logic, and the recent significant improvement in China’s investment environment has further fueled their strong demand for high-growth, high-return assets, increasing their investment in Chinese markets. Essentially, this reflects a long-term optimism about China’s industrial upgrading and technological innovation.

Liu Yan further notes that under a prolonged weak dollar cycle, RMB assets are increasingly attracting global investors. Moreover, China’s capital markets have a relatively low correlation with international geopolitical risks, making them a safe haven for global capital and an optimal choice for international investors seeking diversification under a weak dollar trend.

Source: Securities Times Official WeChat