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China Equity Issuance Doubles as Tech Race Draws Global Investors

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China’s stock markets are seeing renewed interest from global investors, with equity issuance in the first quarter of 2025 nearly doubling compared to the previous year. The surge, totaling $16.8 billion, reflects a shift in investor sentiment as government scrutiny of technology firms eases and emerging tech players like AI software developer DeepSeek gain traction.

The first-quarter equity issuance represents a 119% increase compared to the same period in 2024. Investment activity is being driven by a re-rating of China’s stock market, with investors shifting their focus from caution to seeking opportunities. Despite ongoing risks, especially regarding U.S.-China tensions, China’s valuation gap compared to other global markets is becoming more apparent, attracting long-term investors.

In Hong Kong, the Hang Seng Index has surged 21% this year, outperforming international markets. The MSCI China index is also trading at lower price-to-earnings ratios compared to U.S. and other global markets, making it an attractive option for global investors.

Key to this shift in investor outlook is the easing of government restrictions on China’s tech sector, highlighted by a summit led by President Xi Jinping with top tech leaders. The rise of DeepSeek, an AI company, has further fueled optimism in China’s tech market. The Chinese government’s support for private tech companies, especially in AI, quantum computing, and semiconductors, is being seen as a positive development for foreign investors.

Chinese companies, including those in the AI sector, are helping to drive IPO activity in Hong Kong. With continued strong support from mainland and Hong Kong regulators, the market’s recent surge in activity is expected to remain sustainable.

Tesla Pauses Full Self-Driving Trial in China Pending Regulatory Approval

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Tesla announced on Monday that it would halt its limited-time free trial of the Full Self-Driving (FSD) feature in China, pending the completion of regulatory approval. The pause follows complaints regarding the trial, which was initially scheduled to run from March 17 to April 16.

Tesla’s customer support addressed the issue on the social media platform Weibo, where they stated that all parties involved are working to advance the relevant approval processes. They assured customers that the feature would be released once regulatory conditions are met and urged patience.

FSD is a suite of driving-assistance technologies powered by generative artificial intelligence, designed to handle complex traffic conditions. Tesla is targeting a full rollout of FSD later this year and is collaborating with Chinese tech giant Baidu to enhance the system’s performance.

While Tesla has successfully offered such trials in the U.S. without requiring up-to-date navigation maps—relying instead on local AI training from its 2 million EVs—the company faces challenges in China due to strict data laws that prevent the system from being trained using local data. Additionally, China’s industry ministry implemented new rules in February mandating that autonomous driving-related over-the-air software updates be approved by regulators before they can be deployed.

Malaysia to Tighten Semiconductor Regulations Amid U.S. Pressure

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Malaysia plans to impose stricter regulations on the movement of semiconductors, particularly those from Nvidia, as part of efforts to curb the flow of advanced chips to China under U.S. pressure. The United States has expressed concerns over the potential diversion of these critical chips to China, where they could be used in the development of artificial intelligence (AI) technologies.

Trade Minister Zafrul Aziz revealed that the U.S. government has asked Malaysia to monitor shipments of high-end Nvidia chips and ensure that they are not diverted to unauthorized destinations, particularly China. The U.S. is concerned that servers containing these chips may end up in Chinese data centers instead of the intended locations, and is pushing Malaysia to track every shipment of Nvidia products entering the country.

Malaysia’s investigation into the situation also ties into a broader inquiry regarding a fraudulent transaction case in Singapore, involving the illicit shipment of U.S. servers to Malaysia. These servers may have contained advanced chips covered by U.S. export controls. The case, which involves Singapore-based firms accused of supplying these servers fraudulently, is valued at $390 million. There are concerns that the shipments may have been intended for Chinese AI company DeepSeek, which gained attention for its AI model performance earlier this year.

The U.S. government is also probing whether DeepSeek has been using banned U.S. chips, as part of a wider investigation into the potential violations of export controls on semiconductor technologies.