After years of underperformance the Chinese stock market had strong gains at the beginning of 2025, giving investors confidence that the country might be getting some of its pre-COVID mojo back.  

While underlying concerns about the world’s second-largest economy such as weak consumer demand still persist, the A$170 billion Aware Super said China is too significant a market to not invest in. 

“It’s really hard for any global investors to completely ignore China,” head of equities Agnes Hong told the Top1000funds.com Fiduciary Investors Symposium in Singapore.  

“I do think, though, that there’s been a bit of a shift recently in investment sentiment.  

“In late last year, we are seeing a lot of inflows back into China, especially with the ADRs (American depositary receipt) list in the US away from some of those EM ex-China products.” 

Hong also made the distinction between the Chinese market rallies in last November and this year. While the former was driven by top-down stimulus policy announcements, the latter is related to bottom-up factors where investors are re-evaluating Chinese companies after DeepSeek launched its breakthrough AI model.  

In February, Chinese president Xi Jinping also met with business leaders in the country – including Alibaba’s Jack Ma, who has been away from the limelight in 2020 – in a signal that the nation is shifting to a friendlier stance towards the private sector.  

That was followed by more supportive economic policies, announced in the nation’s top annual political and social meetings the Two Sessions in March, to boost consumer spending and stabilise risky areas including real estate and local government debts.  

“You’ve got one hand, the bottom-up rally, and then the other hand supported by the government policies. So that’s why I think there’s a lot of sentiment that [in] this rally, the momentum could have room to grow,” Hong said.  

But due to the complexity of the Chinese market, Hong said it is critical for allocators to recognise that how they gain access to it is just as important as the capital allocation. Choices like onshore vs offshore equities, active vs passive, and state-owned enterprises or the new economy including service-led sectors, all matter.  

Aware Super was one of the first Australian super funds to receive a QFII license in 2016, which allows foreign investors to participate in mainland China’s stock market. Its public equity exposure is far greater than its private equity exposure and is mostly managed by EM and global active managers both onshore and offshore.  

“We have to go down to the granular level [when investing in China],” Hong said.  

“It’s very dangerous to paint a whole country or even a whole sector with a broad stroke. So what we are all about is selectivity over broad beta. As long-term investors, we are looking at some of those security selection opportunities.” 

UK investor Coal Pension Trustees, which oversees about £20 billion of investments in Mineworkers’ Pension Scheme and the British Coal Staff Superannuation Scheme, is an equity investor in China but also has exposure to liquid credit.  

Chief investment officer Mark Walker said it is somewhat an “unusual” fund, in the sense that it has a mature profile but the British government is its guarantor. It still takes a lot of investment risk, and in 2018 China was the perfect place to get it.  

Today, around 12 per cent of Coal Pension Trustees’ private equity portfolio is still in Chinese funds, but it stopped committing new capital three years ago.  

“We pay out in pensions about £1.6 billion a year, so our payout ratio is about 8 per cent. Cash flows are absolutely critical,” he said.  

“The biggest issue with China, and actually legacy private equity more generally, for us, is not whether we still think we’ve got good investment, but when we actually get the cash back. 

“We have to sell over a billion pounds of assets every year just to pay pensions, so if we don’t get the cash flow from Chinese private equity, in this case, then we have to get it from somewhere else.” 

Despite the uptick in anti-ESG sentiment that’s come with Donald Trump’s return to the White House, large institutional investors are certain that innovations in transition technology will continue and that the broader world has not changed course on the journey to decarbonisation.  

“It’s odd, and certainly you get mixed signals,” said T. Rowe Price’s US-based investment director of private equity, Orlando Gonzalez, at the Top1000funds.com Fiduciary Investors Symposium in Singapore.   

“You get a lot of messaging around increasing drilling, increasing the use of fossil fuels, reducing subsidies for individual taxpayers for electric vehicles, and we’ve seen that for some time across some of the red states in our country. 

“But then you are also seeing…a Tesla dealership being set up on the South Lawn of the White House.” 

T. Rowe Price’s private equity unit has significant investments in late-stage venture capital – firms that are two to four years to an IPO. Its sustainability-related private investment is US-centric and includes areas like battery storage. 

But despite the uncertainties stemming from politics, Gonzalez said the US is slowly but surely increasing its EV adoption rate, while in other areas of the world like China and some parts of Europe the adoption rate has surpassed 50 per cent.  

“We’re heading in that [electrification and decarbonisation] direction, albeit it’s going to be a bumpy ride for the next just under four years,” he said.  

The C$473 billion Caisse de dépôt et placement du Québec (CDPQ) is also firm in its position that all significant investments need to pass through its sustainable investing approach.  

The Canadian pension investor has a target of investing C$54 billion in low-carbon assets by this year, which it is on track to meet. Managing director and head of Asia Pacific Wai Leng Leong said there has been no shortage of sustainability-oriented opportunities for CDPQ to meet its commitments, with a focus on decarbonising the real economy. 

One example is réseau express métropolitain (REM) which is a public-private partnership between CDPQ’s subsidiary – CDPQ Infra – and the governments of Quebec and Canada to design, build and operate a 67km light speed rail system across greater Montreal. It is entirely electrified and automated and is reportedly the least expensive new public transit system built in North America. 

“A lot of us are here sitting in Asia thinking ‘what’s the big deal’? But it is a very big deal in Quebec, because that’s the largest public infrastructure project in over 50 years,” Leong said.  

T. Rowe Price’s Gonzalez observed the needs for similar kinds of public-private partnerships in the US, especially across water, transportation and electric infrastructure.  

“[Infrastructure] has really been an area where we’ve under invested for decades,” he said. “One, it creates lots of jobs in the [US] economy – which is doing well, but could certainly do better.” 

“[Secondly], it’s an area where we’re bleeding a lot of resources. By improving the infrastructure, we could really have an important climate impact as well.” 

Investors in the Asia-Pacific region must be better prepared for the impact of President Trump’s “national securitisation of everything” strategy, which is blending defence and commercial imperatives, according to Michael Shearer, senior counsellor for Asia-Pacific at Veracity Worldwide. 

Shearer – speaking at the Top1000funds.com Fiduciary Investors Symposium before President Trump this week unveiled hefty tariffs across dozens of trade partners which sent markets plummeting – said the current pace of geopolitical change was unprecedented.  

A key shift was the US government designating an ever-widening array of issues, assets and industries as strategic to national security. 

“What happens when commercial imperatives take a back seat to strategic ones?” he asked at the symposium in Singapore.  

“How do we assess business cases and investment propositions when the targets are not purely commercial in nature, and then as the lines between commercial technologies and services and defence blur, are we comfortable and equipped to be investing in defence?” 

Investors must now navigate greater regulatory complexity and enforcement risk, as the country that ultimately owns and controls a business matters as much as where it is located, he said.  

His comments proved prescient as companies with complex global supply chains, such as Apple, Nike and Adidas, were heavily sold off after President Trump unveiled tariffs of at least 10 per cent starting April 5.  

Shearer referred to this rising challenge facing investors, with one global asset owner holding investments across three key impacted verticals: energy transition, emerging technologies, and critical minerals.  

“If you’re looking, for example, at a long-range investment into, say, a data centre, there are real issues to consider now when it comes to who is used to put in place the undersea cables for data and for power.” 

Shearer recommended asset owners recalibrate their mindset to include a greater awareness of geopolitical implications and understand the pain points in their portfolios. 

This included systematically mapping out the impact of new policies and tariffs (broken down by location and ultimate ownership) in an environment of heightened political risk.   

“We’re aware of some investment firms running China exposure checks for every deal they’re doing, regardless of jurisdiction or asset to make sure that the suppliers, customers, or the very sector they’re investing in, doesn’t make them vulnerable to sanctions or censure.” 

Shearer pointed towards two major potential risks in the years ahead.  

One was the high chance of an earthquake in Tokyo sometime in the next 30 years, which would be catastrophic for supply chains. The other risk is Taiwan where tensions have been escalating with China, although Shearer said Trump is currently more focused on resolving the Ukraine-Russia war. 

With the ability to uncover hard-to-find information and enable more frequent trading in traditionally illiquid asset classes, new technologies like artificial intelligence and tokenisation could be the biggest disruption most private markets investors will see in their lifetime. 

At the Top1000funds.com Fiduciary Investors Symposium, head of research at FCLTGlobal Eduard van Gelderen said the digitisation of private market information that is taking place will have big consequences for investors. For one, data will cost less.  

“There is already a lot of data out there related to private markets. But is it readily available? No,” the former PSP Investment chief investment officer told the symposium in Singapore.  

“Unfortunately, some of those [private market] databases are still very expensive, but the data is there. And the reason why the data is there, is because this whole society is full of sensors. Everything is monitored. 

“It’s a question of time before that data really becomes available.” 

Secondly, technologies will change what investors do with the data. If private markets were to become like public markets with the volume of information available, van Gelderen said the biggest problem for investors then having too much data to make effective investment decisions.  

One thing AI is particularly good at, at least in short-term strategies, is sorting through noise and identifying the underlying market signals, said van Gelderen. 

“If you look at what is available now in practice, but also in academic research, then what you see is that AI is actually a very helpful tool in getting profitable investments strategies in place – alpha generation,” he said. 

Another technology with private market applications that van Gelderen is bullish on is tokenisation – the process of converting an asset or the ownership of an asset to a digital form using blockchain. And there have already been tokenisation experiments in private equity.   

Last year, Citigroup, with asset managers Wellington Management and WisdomTree, completed a simulation exploring how private equity funds can be tokenised while staying compatible with existing bank systems. 

There are several appeals of tokenising private assets, van Gelderen said. Apart from increased liquidity, tokenisation can enable the ownership of small fractions of an asset, which could lower the barrier to entry for retail investors, and allow for faster and automated transaction processes that complete in minutes, if not seconds. 

“When people talk about tokenisation, immediately, they think trading Bitcoins … that respect, I find pretty irrelevant,” van Gelderen said.  

“What is important is the technology of blockchain, and blockchain is actually very dependent on tokenisation.” 

He believes tokenisation will be a key method for boosting trading in private markets in the future.  

“[The likes of] secondary markets, it’s great that it’s there, but at the end of the day, it’s still very traditional. There’s a seller and we have to look for a buyer, and then we start to negotiate stuff. 

“I’m a firm believer that tokenisation will make private markets or private assets liquid going forward.” 

Capital markets continue to be a key battlefield of power between Beijing and Washington, and whether the yuan has a serious chance of taking over the dollar as the international currency is the next big question for the world economic order. 

The struggle is especially evident in developing countries. While the influence of US capital has waned due to the shuttering of foreign aid organisation United States Agency for International Development, China is working hard to increase its presence through programs like the Belt and Road Initiative (BRI).  

At the Top1000funds.com Fiduciary Investors Symposium, Asian law expert and Associate Professor at National University of Singapore, Weitseng Chen, said one unique thing about the yuan internationalisation scheme is China’s “capacity to maintain a dual system”. 

“One system is the US dollar-based system that is the foundation of global capital markets,” he told the symposium in Singapore. “Nowadays, China is the largest beneficiary of globalisation. They try very hard to uphold the current system and blame the United States of breaking down this current system.” 

“But on the other hand, China has established a quite effective alternative [currency] system.” 

This system includes the BRI; the Asian Infrastructure Investment Bank, which is a previous extension of BRI but later broadened its investment scope to unrelated infrastructure projects in Asia; the Cross-border Interbank Payment System that offers clearing and settlement services for yuan; and the so-called ‘dim sum’ bonds issued in foreign countries but denominated in yuan.  

Chen said users of the alternative yuan system are still limited, but its existence provides China with a plan B if it faces Russia-like sanction from the US.

“It’s already proved that [the system] is totally viable and possible,” he said.  

“US sanctions against Russia failed simply because Russia has been able to switch to this alternative platform, it’s quite powerful.” 

Chen said there is also a divergence in capital markets regulations between the two countries despite liberal scholars’ predictions over the past two decades that there would be convergence of globalised capital markets.  

“Convergence indeed happened. If you check out regulations on securities, both in the US and in China, they look surprisingly identical on many regards,” he said. “But this convergence is kind of superficial.” 

For example, investors have to opt in for complex deal structures like variable interest entity (VIE) if they want to invest in certain sectors in China with restriction of foreign ownership, such as technology. Under VIE, Chinese companies looking to list offshore will set up an overseas company, allowing foreign investors to purchase the stock.  

The foreign investor is then deemed as a creditor, not an owner of the company, “with inferior rights”, Chen said, adding that the US market regulator is “tolerating” structures like this because it wants to attract listings in the US. 

But from a legal perspective, these differences could cause global investors woes in periods of geopolitical tension. Overlapping jurisdictions in global markets create fertile ground for “legal warfare” between countries and investors need to stay vigilant. 

“There is an undercurrent…but we just ignore it. When geopolitics doesn’t matter to transactions, it’s okay; but when politics matters now, it is not okay,” he said.  

A world where the US dollar is no longer the reserve currency seems increasingly likely by the day, and institutional investors are wary that it could fundamentally change the way they construct portfolios. 

At the Top1000funds.com Fiduciary Investors Symposium, Bridgewater Associates head of portfolio strategist group Atul Lele said one cause of the de-dollarisation trend – where the greenback’s status as the world’s main reserve currency is challenged – is the so-called “modern mercantilist” trade policies.  

“[Modern mercantilism] is the idea that governments are really looking after their own sovereignty as their number one priority; seeing trade deficits as being something that is a transfer of wealth to other nations; and seeing the need for national champions to come back,” he told the symposium in Singapore, adding that one of its latest manifestations is the US tariffs. 

US equities make up 70 per cent of the MSCI World Index and need strong capital inflows to maintain that status. But Lele said investors may be less willing to put their money into the market given restrictive new trade policies.  

“One thing that’s for sure is that capital moves quicker than trade,” Lele said.  

“The US trying to enforce a number of these policies is something that could be an accelerant towards funds not only not continuing to invest their marginal dollar into the US, which is a negative pressure on the US dollar, but also potentially pulling out.”  

Another force behind de-dollarisation is political conflicts, Lele said.  

“[After the] confiscation of US assets from Russia, you immediately saw not only Russia’s holdings shift away from US Treasuries to other assets, but the rest of the world starting to shift as well,” he said. 

“That was accelerating a path that was already underway from countries such as China, who were moving away from the US dollar into assets such as gold. 

“The question becomes, what do we actually trade in if we’re not going to be trading in US dollars?” 

Planning ahead 

CPP Investments’ head of portfolio design and construction, total funds management, Derek Walker, said that it’s not easy to scenario plan around de-dollarisation. 

“The scenarios we run capture some elements of that [de-dollarisation possibility], but I think it’s a really challenging one to work that all the way through,” he said. 

“We are trying to capture – in the scenarios that we’re running – different states of the world that are more disrupted than the current one, but maybe not to that extreme like a major de-dollarisation of the [world] economy.” 

For example, CPP Investments would examine different allocations and asset class relations in a world with stable inflation and growth, as well as in a world with higher inflation and more volatile and lower growth.  

But Bridgewater’s Lele said a lot of investors today are making a big bet on a continuation of the past 10+ years of a pro-corporate, pro-liquidity, pro-growth, disinflationary boom and period of global harmony. Understanding different regimes is critical, as investors seeking portfolio resilience need to think about the probabilities of a range of investment outcomes and be conscious of which scenario they are betting on. 

“[Investors] are saying, probabilistically, we are keeping our allocation the way it is, a 70/30 global portfolio, [then] they’re making a bet that you’re going to see a repeat of what is amongst the top 5 per cent of performances going back over the last 100 years.” 

“So building resilience includes: number one, thinking about what resiliency means to you; number two, recognising the full range of outcomes that you can get and where your vulnerabilities are; and number three, starting to pull the levers that you can pull to mitigate those vulnerabilities. 

“These are the things that really start to impact the path of your returns over time.” 

Also presenting on the panel was Man Keung Tang, managing director of macro strategy at Singapore’s Temasek.