China and Foreign Investments: Hedge Funds Lead Market Comeback

Yanko Hristov, Head of Business Development and Sales at Alaric Securities, on “Business Start”, October 6, 2025

China and foreign investments are increasing for the first time in four years, and last month, foreign hedge funds were the most active buyers of Chinese stocks. Although China is the world’s second-largest economy, it is still considered by risk managers to be an emerging market.
>This was stated by Yanko Hristov, Head of Business Development and Sales at Alaric Securities, during an interview on Bloomberg TV Bulgaria’s “Business Start” hosted by Hristo Nikolov.

More than 50% of the Asian assets of the world’s ten largest global banks are located in China. Since 2021, China has been largely neglected by investors, but this is changing. We are witnessing an increasing number of IPOs. This renewed activity indicates that China and foreign investments are closely linked, as international capital begins to flow back into mainland markets. The relaxed requirements introduced by the Chinese Communist Party are producing results, and investments in mainland China are on the rise.

Geopolitical Tensions and Their Impact on China and Foreign Investments

According to Hristov, risks arising from geopolitical tensions are still present, but other factors are becoming more important. It is worth noting that for many years, China imposed strict limits on how much a stock price could fall in a single day. Similar restrictions exist in other markets, but China’s were particularly tight. Tariffs are another significant concern for investors.

Since the beginning of 2025, Chinese stock indexes have shown considerable volatility. Hong Kong-listed shares are appreciating faster than those on the mainland because Chinese investors are accustomed to channeling their capital through Hong Kong.
“Another interesting fact is that although China’s economy has some weaknesses, the broad indexes are also moving upward. This means that small and medium-sized companies are also growing,” commented Hristov.

How Are China’s Major Companies Performing

Amazon and Alibaba are similar companies; both operate as online marketplaces and are leaders in the field of artificial intelligence. The rapid growth of companies like Alibaba, BYD, and Xiaomi underscores the importance of foreign direct investment in China as tech and innovation remain key drivers of growth.

Alibaba has one of the largest cloud infrastructures in the world,” explained Hristov.
Another important player is BYD, which sells more cars than Tesla. The same applies to Xiaomi and other tech companies, which have experienced growth of 60–70% per year.

The guest added that behind these stocks lies real business — “we can’t talk about a dot-com bubble scenario.” Warren Buffett’s exit from BYD was his own decision — every investor has the right to realize profits. However, a potential deterioration in U.S.–China relations might have influenced that move.

“If you are an export-oriented company, a strong yuan can be an obstacle. On the other hand, China can rely on its massive domestic consumption,” he said.

European investors are increasingly favoring investments in Hong Kong. The low bond yields give equities room to keep rising,” Hristov summarized.

“We can expect the positive trend in gold and silver to continue as long as there are no changes in the geopolitical situation,” he forecasted.

Watch the full interview in the video.

Source: BloombergTV Bulgaria

This material is not an investment recommendation.

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