Changpeng Wan
Surging Positions Signal Market Confidence
China’s private equity giants are placing big bets on a market resurgence, with billion-dollar funds leading an unprecedented buying wave. Data from private placement network Pengpai reveals overall private equity positions leapt to 77.36% by July 4, 2025 – nearing year-to-date highs after rising 2.07% in just one week.
Billion-Dollar Funds Lead the Charge
The biggest players fueled the momentum, with positions at flagship funds soaring 3.3% weekly to reach 83.26% – hitting a 93-week peak:
– Full-position funds surged to 72.41% (up 6.35% weekly)
– Positions below 50% dwindled to single digits
“This vigorous positioning shows fund managers’ conviction in China’s structural opportunities,” notes FO Fund manager Li Chunyu (李春瑜), citing rare bullish alignment.
The Logic Behind the Buying Binge
Key Drivers
Private equity managers point to three converging tailwinds:
1. Policy catalysts: Insurance capital deployment, corporate buybacks, and targeted lending
2. Historic valuations: A-shares trading below historical averages
3. Growth sectors: AI and emerging consumer brands gaining momentum
Technical Indicators Flashing Green
The CSI 300’s risk premium signals stocks’ valuation edge over bonds, sitting near 95th percentile yields versus fixed income. As Yu Zongliang (喻宗亮), CIO at Xing Shi Investment, observes: “A-shares remain fundamentally discounted despite recent gains.”
Macro Forces Shaping Investment Strategy
Anti-Internalization Driving Profits
Fund managers see anti-internalization policies as transformative. Kangmande Capital notes: “Reform curbs destructive domestic competition, spurring corporate profitability as companies reserve cashflows for innovation.” Market-wide consensus indicates listed companies approach earnings inflection points.
The Hong Kong Opportunity
Zige Investment identifies Hong Kong markets gaining strategic relevance:
– Broader sector coverage beyond traditional tech/real estate
– Improving representation of China’s premium assets
“Hong Kong naturally captures global capital seeking China exposure,” their strategy report emphasizes.
Portfolio Positioning Shifts
Fund allocators target dual opportunities:
– Value: Blue-chips trading below historical P/E
– Growth: AI architecture plays positioned for ISAAC adoption
One Shanghai-based fund manager explained: “After June’s consolidation, we see asymmetric potential in neglected large-caps.”
Implications for Investors
Reading the Institutional Signals
While retail investors shouldn’t blindly imitate, position surges reveal professional conviction:
– Net purchases concentrated in industrials, healthcare, AI infrastructure
– Hedge ratio declines point to reduced hedging urgency
Industry leaders urge monitoring thematic ETF flows (Bloomberg ETF tracker).
A Reshaped Investment Landscape
The stampede toward equities represents more than seasonal positioning—institutions affirm material shifts in market fundamentals. Three key pillars now support sustained engagement: policy continuity, valuation advantages, and corporate transformation under anti-internalization reforms.
Market participants should review asset allocation thresholds to capture structural momentum. As swing factors align—from renewed foreign inflows to corporate guidance upgrades—actively managed funds offer asymmetric opportunity potential. Engage advisory teams to reassess exposure windows during valuation normalization.
