Key insights from Eastspring’s 2026 China Investment Summit

Eastspring Investments’ inaugural China Investment Summit in Shanghai brought together perspectives from Eastspring and Prudential’s three joint ventures in China - CITIC-Prudential Fund Management, CITIC-Prudential Life and BOCI-Prudential Asset Management. The discussions explored some of the key forces shaping the investment landscape, from Artificial Intelligence and Asian bonds to the changing narrative in China equities and portfolio design in an increasingly uncertain world. We bring you a summary of the key takeaways from the summit.

While infrastructure is driving the current phase of the AI revolution, applications may define the next. This would broaden the group of AI beneficiaries beyond semiconductors and hardware providers to companies that use AI to improve productivity, strengthen competitive positions and increase revenues.

Some areas where AI applications can create commercial impact include software companies embedding AI into existing products and automating workflows to obtain higher pricing. System integrators can also use AI to accelerate digital transformation for their enterprise clients. With AI, cybersecurity companies can detect threats faster. For e-commerce platforms, AI can increase revenue growth by personalising recommendations, and lifting customer conversion rates. In the healthcare sector, AI-driven drug discovery is emerging as one of the key pathways to creating tangible economic value as drugs reach clinical trials and commercialisation faster.

Mispricing opportunities are likely to emerge with these new areas of value creation especially if investors continue to focus on obvious AI winners or underestimate the pace of AI monetisation.

Risks to monitor

• Crowded trades can unwind quickly – stay disciplined on valuations.
• Assess whether market reactions reflect a deterioration in fundamentals or sentiment-driven volatility. For now, we see Korean memory chipmakers’ recent High Bandwidth Memory specification adjustments as reflecting supply shortages rather than demand weakness. Likewise, recent reports of a global tech conglomerate’s plans to rent out excess cloud compute capacity look more like revenue optimisation rather than capex retrenchment.
• Watch China’s push for semiconductor self-sufficiency, as seen in the recent large STAR Initial Public Offering by a Chinese memory maker. Rising competition could pressure profitability across parts of the global semiconductor supply chain.

China equities are becoming more attractive as shareholder returns and corporate governance improvements converge with structural growth opportunities. A- and H-share markets offer complementary ways to access this evolving opportunity set.

China’s equity market has historically been viewed as being policy-driven and highly cyclical. This narrative has shifted in recent years. Following the rising participation of southbound flows and long-term allocation funds in the market, there is an increasing management focus on dividends, cash flow, share buybacks and corporate governance.

Renewed interest in Chinese equites has been supported by a few key developments since 2025. The AI boom and China’s strong export engine mitigated the drag from the property sector, underpinning economic growth. At the same time, China’s domestic substitution strategy fostered the emergence of globally competitive and innovative companies in high-end manufacturing and the AI supply chain.

What A- and H-shares offer investors

Chinese insurers are experiencing a structural return gap amid China’s low-interest rate environment today. As higher-yielding assets mature, reinvestment risk is rising, making it challenging to meet long-term insurance liabilities. A potential solution is to expand offshore bond allocations, a path which Japanese and Taiwanese life insurers have taken. With Chinese insurers’ overseas assets only accounting for ~2% of their portfolios, there is considerable room for the overseas allocation to rise before it hits the 15% regulatory cap.

That said, offshore fixed income brings a different return path compared to onshore bonds. Higher returns from offshore bonds may come with greater mark-to-market volatility. Return objectives should therefore be calibrated against an explicit volatility and drawdown budget, rather than focusing on yield alone.

Foreign currency exposure introduces an additional layer of risk. Fully hedging offshore currency exposure back to RMB can materially reduce the yield advantage of offshore bonds. On the other hand, leaving offshore currency exposure unhedged raises the risk that RMB appreciation may erode, or even offset, the underlying bond return.

Why Asian bonds

For Chinese insurers, Asian fixed income can offer a broader, high-quality opportunity set that can enhance returns and deliver sustainable RMB-adjusted outcomes.

In uncertain markets, portfolio design needs more adaptive sources of alpha, deeper customisation, and risk management tools that can respond when historical relationships become less reliable.

How to build more resilient portfolios