Goldman Sachs stated that although the Chinese stock market significantly outperformed the S&amp;P 500 and European markets in February, the flow of funds has not fully kept pace. Aside from technology stocks, other assets related to China's recovery have performed relatively quietly, which may conceal substantial investment opportunities.Goldman Sachs analyst Christian Mueller-Glissmann noted in a report on February 24 that despite the impressive performance of the Chinese stock market, the amount of funds flowing into mutual funds and ETFs in the mainland and Hong Kong markets does not align with the positive signals, indicating a disconnect between market sentiment and actual actions.Further analysis shows that southbound funds, hedge funds, and the inflow of funds into onshore artificial intelligence-themed ETFs have shown a more optimistic shift. This suggests that a portion of &#34;smart money&#34; has begun to take action.Goldman Sachs indicated that among all Chinese assets, technology stocks are undoubtedly the brightest stars. The performance of the Hang Seng TECH Index over the past six months has been one of the best in its history.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/87c0a9a9-5497-4601-9f3c-6bd411ab9c8a.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/87c0a9a9-5497-4601-9f3c-6bd411ab9c8a.jpeg"/>Specifically, information technology (IT) and cyclical sectors have performed outstandingly in H-shares, far surpassing consumer staples, healthcare, and financial sectors. This is driven by both the Chinese government's more proactive support for the private sector and new advancements in the artificial intelligence field, such as DeepSeek-R1.In terms of individual stocks, Alibaba's 65% increase year-to-date and Xiaomi's 50% increase are particularly noteworthy.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/d46ef3b3-5cb4-4ed9-8323-c0a36da43b66.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/d46ef3b3-5cb4-4ed9-8323-c0a36da43b66.jpeg"/>However, it is worth noting that among Goldman Sachs' &#34;China Factor&#34; basket of assets, aside from the Hang Seng China Enterprises Index (HSCEI) and copper, other assets have performed relatively sluggishly. This suggests that the market may be underestimating the sensitivity of these assets to China's economic recovery, which may conceal significant investment opportunities.Goldman Sachs' China strategy team believes that the rotation model between A-shares and H-shares now predicts better returns for A-shares. The upcoming Two Sessions may confirm a supportive expansionary stance, which will benefit domestically listed companies.Risk Warning and DisclaimerThe market has risks, and investments should be made cautiously. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this is at one's own risk

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Goldman Sachs pointed out that although the Chinese stock market performed excellently in February, capital inflows have not fully kept up, especially as non-tech stocks performed mediocrely, which may hide investment opportunities. Analysis shows that southbound capital and hedge funds' optimism towards the Chinese market is rising, with tech stocks performing outstandingly and the Hang Seng TECH Index achieving historical highs. Goldman Sachs believes that the rotation model between A-shares and H-shares predicts better returns for A-shares, and recent two sessions may confirm supportive policies

- Goldman Sachs reports that while China's stock market has outperformed the S&P 500 and European markets in February, fund flows have not fully aligned with this performance.  
- Analyst Christian Mueller-Glissmann notes a disconnect between market sentiment and actual investment actions, although there is a more optimistic shift in southbound funds and hedge funds.  
- The technology sector stands out, with significant gains in stocks like Alibaba and Xiaomi, suggesting potential investment opportunities in undervalued assets linked to China's economic recovery.

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Hang Seng TECH Index

Direxion FTSE China Bull 3X

Direxion FTSE China Bear 3X

XI2CSOPHSTECH

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CSOP HS TECH

Huatai-PB CSOP Hang Seng Technology ETF(QDII)

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