On February 20th, U.S. stock markets experienced a downturn as all three major indexes closed lowerThe Dow Jones Industrial Average fell by 1.01%, while the S&P 500 index dropped by 0.43%, and the Nasdaq Composite index decreased by 0.47%. Notably, retail giant Walmart saw a significant decline of over 6%, and JPMorgan Chase suffered a loss exceeding 4%, contributing to the downward trend of the Dow.

In contrast, Chinese assets witnessed a substantial surge, with Chinese concept stocks broadly risingFor instance, Alibaba experienced an impressive uptick of over 8%. In the onshore market, the Chinese renminbi closed at 7.2391 against the U.S. dollar in the night trading session, marking a notable increase of 384 basis points from the previous trading dayThe bullish sentiment among Wall Street investors toward Chinese assets continues to grow, with several major international banks issuing optimistic reports about the market.

U.SStocks Decline

According to Wind data, at the end of the day, the Dow closed at 44,176.65 points, the S&P 500 finished at 6,117.52 points, and the Nasdaq ended the session at 19,962.36 pointsMovements in large tech stocks were mixed, with the Wind U.STechnology Seven Giants Index slightly declining by 0.2%. Individual tech stocks such as Amazon, Netflix, Meta, and Tesla all fell by more than 1%, while Google saw a minor decrease; Intel gained over 1%, and Apple, NVIDIA, and Microsoft experienced slight upticks.

In terms of performance, AppLovin plummeted by nearly 9%, marking its worst single-day performance since December of the previous year

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Meanwhile, stocks related to quantum computing maintained their upward momentum, with D-Wave Quantum soaring by 13%, SEALSQ by over 10%, Arqit Quantum by more than 6%, and Rigetti Computing rising approximately 4%.

Banking stocks, however, were universally lower, with JPMorgan falling over 4%, Goldman Sachs dropping by more than 3%, Citigroup declining by about 3%, Morgan Stanley experiencing a drop of more than 4%, Bank of America losing over 1%, and Wells Fargo decreasing by more than 2%.

Chip stocks exhibited mixed results as well, with the Philadelphia Semiconductor Index edging up by 0.02%. Texas Instruments jumped over 3%, Lam Research gained more than 1%, Intel increased by over 1%, Applied Materials saw a rise of over 1%, and Microchip Technology also gained more than 1%. On the flip side, GlobalFoundries fell by more than 2%, ARM dropped by over 2%, Marvell Technology declined by more than 2%, and Micron Technology saw a drop of over 1%.

International precious metals futures largely experienced gains, with COMEX gold futures rising by 0.66% to $2,955.6 per ounce, while COMEX silver futures climbed by 1.25% to $33.455 per ounce.

Chinese Concept Stocks Surge

While U.S. stocks displayed a downward trend, Chinese concept stocks surged sharply.

The NASDAQ Golden Dragon China Index increased by 1.6%, and the Wind China Concept Technology Leaders Index rose by 3.31%. Among popular Chinese concept stocks, Tuya Smart saw an impressive gain of over 26%, while Global Data surged by more than 12%, Century Internet rose by over 12%, Bilibili gained more than 8%, Alibaba increased by over 8%, and JD.com and Weibo both saw rises of over 5%. Yet, not all stocks fared well, with WeRide dropping over 18%, iQIYI experiencing a decline of more than 9%, and Amphenol losing over 4%.

In terms of significant news, Alibaba Group Holding Limited announced its financial results for the third quarter of the 2025 fiscal year

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During the reporting period, the e-commerce business accelerated growth, with Alibaba Cloud's commercial revenue returning to double-digit growth and AI-related product revenue maintaining triple-digit percentage increases for six consecutive quarters.

Positive changes are emerging in Chinese assets, with the bullish sentiment on Wall Street expandingRecent news indicates that Morgan Stanley has abandoned its bearish outlook on the Chinese stock market and has adopted a bullish stance insteadThe powerhouse recently upgraded its MSCI China Index rating from "underweight" to "equal weight" and raised its target for the MSCI China Index by 22%, significantly from 63 points to 77 points by the end of 2025. Additionally, it raised the target for the Hang Seng China Enterprises Index from 6,970 points to 8,600 points, and the Hang Seng Index's target from 19,400 points to 24,000 points.

Foreign media have reported that Morgan Stanley's rating upgrade represents a significant shift, indicating that global investors' attitudes toward the Chinese market may be undergoing a fundamental change.

Goldman Sachs raised its target for the MSCI China Index, while JPMorgan and UBS also expressed bullish opinions.

The Chief China Equity Strategist, Liu Jinjing, and his team at Goldman Sachs published a research report projecting that the widespread adoption of AI over the next ten years could drive annual profit growth of 2.5% for Chinese stocks overallFurthermore, improvements in growth prospects and a potential boost in confidence are expected to increase the fair value of Chinese stocks by 15% to 20%, potentially bringing in over $200 billion in portfolio inflowsThese factors prompted the equity strategy team to raise their targets for the MSCI China Index and the CSI 300 Index to 85 points and 4,700 points, suggesting an upside of 16% and 19% over the next 12 months.

A report from JPMorgan indicated that, while it's difficult to predict how long the current AI-driven rally in Chinese internet stocks will last, they are confident that this trend is sustainable beyond just a month

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They suggest that the recent recovery in Chinese tech stocks, spurred by the development of generative artificial intelligence (AI), should have more staying power than last year's rallyEven after the recent rebound, there remains a notable valuation discount for Chinese tech stocks.

UBS Wealth Management’s APAC Investment Office published a report indicating that ongoing policy support and the long-term growth impact of AI create space for further appreciation of the currently low valuations in the Chinese stock marketThey have raised their target for the MSCI China Index from 68 points to 77 points for the end of the yearThey believe that the Chinese internet sector is attractive and will achieve moderate returns by the end of the year, recommending a focus on select Chinese internet companies.

The Institute of International Finance (IIF) released a global fund flow report on February 18th, highlighting that in January 2025, both the Chinese stock and bond markets achieved net inflows of foreign capital for the first time since August of the previous year, attracting over $10 billion in foreign investment during that monthDriven by positive policy expectations, rapid development in tech innovation sectors, and stable asset performance, international investor enthusiasm for Chinese assets continues to rise.

Is Now the Time to Buy Stocks Globally?

According to a Bank of America survey, 34% of respondents foresee global stock markets becoming the best-performing asset class by 2025, with expectations of a recession in the global economy dropping to the lowest point in three yearsApproximately 77% of fund managers predict that the Federal Reserve will lower interest rates by 2025.

“Investors are currently 'long on stocks and short on everything else.'” A recent Bank of America survey indicated that stocks have become the most favored asset class among global investors, with risk appetite among investors reaching its highest level since 2010.

The survey revealed that fund managers' cash levels have dropped to a 15-year low, with 34% of respondents forecasting global stock markets to be the best-performing asset class by 2025, and 11% indicating insufficient bond holdings.

Additionally, the survey showed that expectations of a global economic recession have reached their lowest point in three years, while about 77% of fund managers anticipate the Federal Reserve will lower interest rates by 2025.

(Note: Markets are risky, and investment decisions should be made cautiously

This article does not constitute any investment advice.)