Domestic flows to drive Chinese equities in 2026

My path is not traditional. I have a background in science and studied biochemistry at university in Shanghai and then completed a Master’s in computer science in the US before my first job as a software engineer for Motorola. I think that the scientific background gave me something important – a bias for quantitative analysis. I like problem solving and deconstructing complex systems, so I have always been data-driven, which has helped me as an investor. At Motorola I got into a leadership program that basically rotated through functions like operations, marketing, and even HR. That was another important grounding in understanding how business really works and gives me a different perspective from many peers.

At the same time I was studying an MBA part-time and eventually landed a job in the Motorola strategy team. We had internal venture capital to deploy, so I was working on acquisitions, which was basically my start in investment. In that role, I was evaluating a wide range of internet, consumer, and tech startups for potential strategic fit to Motorola. Although I was based in Chicago, my work required spending time in Beijing, where I realized these startups represented something bigger: a fundamental shift in the Chinese economy toward consumption and digital innovation. It became clear that the next decade’s growth story was there. That insight drove me to return to China. I moved to Hong Kong and that’s where I switched to investment banking, first with Norges Bank and then Morgan Stanley, before joining Robeco in 2015. I love investing because it's analytical, and demands accountability and intellectual honesty. The market eventually tells you if you’re right or wrong and you have to be true to yourself.

My framework is simple: a durable moat, strong execution, shareholder-aligned governance, and a fair price. First, the competitive advantage that’s in the business model, so that could be a strong brand, a network effect, a technology advantage, or a structural cost advantage – basically a moat. That protects you across the economic cycle. Then I look at the execution capability. Can the management team consistently deliver and implement the strategy? And the third one is sound corporate governance because even if you have a good business, if transparency is absent or the interests are not aligned with shareholders, then this doesn't make a good stock. I believe if you find a business like this and pay a fair price then eventually the stock will take care of itself. That renders broader market volatility as noise and a potential opportunity.

Resilience. You can’t predict the future or rely on consensus. Volatility is inevitable whether it’s bubbles or trade wars or natural disasters. That is why resilience is critical: it provides the internal discipline and conviction needed to invest through these periods of stress and through the economic cycle.

2025 is interesting if you just look back. You have the DeepSeek moment and you have the gradual stabilization of the US-China trade war – and those two factors have been the drivers. On the other hand, I would say property has continued to weaken, so there are countervailing forces. China’s growth engine is now from digital services, advanced manufacturing, and AI. I don't think property represents a systemic risk, and at the same time, looking externally, exports are still strong and there seems to be reasonable stability in trade relations with the US. China has proved it really holds some bargaining chips and Trump wants to focus on domestic affordability.

Furthermore, we are also likely to have liquidity support because monetary policy will stay accommodative, and I think the upcoming Fed rate cut opens up more policy room for China. Structurally, domestic equity flows are poised to rise, insurers are getting a lot of inflow due to low yields, and they will allocate to the equity market, while retail investors are moving some savings away from property and into the stock market. However, earnings is something that really needs to be watched because last year’s rally relied on some multiple expansion and so for 2026 we need some earnings resilience. The challenge is the deflationary environment, and I think there will be divergence between sectors but, overall, we remain constructive.

To prioritize domestic self-reliance without undermining the export engine, the policy being pursued is dual circulation. This involves keeping exports robust by industrial upgrading into high-value goods, and reinvesting the earnings into technological self-sufficiency, including AI, and the whole related value chain.

Consumption is now the stated policy priority, but the approach would be incremental. With the growth target likely set around 5%, that outcome appears achievable with some fiscal support, though not with dramatic measures – unless the property downturn deteriorates materially or export growth weakens sharply. We expect early-year support to focus on improving implementation of existing trade-in and equipment-upgrade programs, then gradually broaden toward service consumption, through measures tied to travel, education, and family support aimed at lifting the birth rate. Stabilizing the property sector remains essential as well, given the negative wealth effect weighing on consumer sentiment. Structurally, to support higher consumption they need to build a better social safety net in the long run as it's the perceived absence of economic security that’s behind the very high savings rate.

We are committed to our barbell strategy. On one side, structural growth, on the other, value and high dividends. For structural growth a key theme is high-end manufacturing – from ‘made in China’ to ‘made by China’ with leading manufacturers increasingly establishing a global footprint. We also favor technology and innovation, driven by AI development and the push for self-reliance. On the other side of the barbell, we target value through high yield names capable of sustaining dividends in a deflationary environment, as well as beneficiaries of anti-involution policies, particularly in upstream industries where demand is firm, like aluminum for example.

The US and China can both ‘win’ in AI – but in different ways. The US will likely continue pushing the technological frontier, while China is building a near full‑stack, parallel ecosystem spanning rare earths, energy and compute infrastructure, hardware components, models, and real‑economy applications. Despite constraints at the leading edge of semiconductors, China is offsetting them through scale, low costs, and engineering execution: leveraging abundant renewables, strengthening critical connectivity inputs (optical modules and high‑end PCBs) that also supply global value chains, and optimizing models to run efficiently on less‑advanced GPUs. The result is an ‘efficiency playbook’ that drives inference costs down, speeds diffusion across platforms and industry, and enables an agentic future where low‑cost systems can iterate at scale. Combined with a fast‑follower ‘One‑to‑N’ commercialization playbook and deep engineering talent, this trajectory looks durable.

I think Tencent in 2009 is still my best investment. Then there is CATL, which we owned from the IPO in 2018 and has been leading this whole energy transition. Lastly, Midea Group, an appliance maker, which we started investing in from day one in my Robeco time. Looking back, these three stocks perfectly mirror China’s multi-decade growth journey: Tencent captures the explosion of the mobile internet; CATL represents the green transition and high-end manufacturing going global; and Midea tells the story of the emerging middle class and the rising penetration of home appliances.

*The companies named on this page are for illustrative purposes only. No inference can be made on the future development of the company. These are not buy, sell or hold recommendations.

This interview was originally published in the Robeco Fundamental Equity Quarterly