Foreign shareholding improved quarter over quarter in 2Q26, led by Hengli and Shuanghuan

Overview

This report is a quarterly observation of foreign shareholding in A-share names within Deutsche Bank's APAC Automation & Industrials coverage, focusing on changes in foreign ownership through the Shanghai-Shenzhen-Hong Kong Stock Connect. In 2Q26, the average foreign shareholding across the eight covered A-share names was 7.5%, up 0.8 percentage points from 1Q26, indicating a quarter-over-quarter recovery in foreign allocation sentiment.

Core views

The core conclusion is that the improvement in foreign shareholding was not broad-based and synchronized, but rather driven by a small number of names: Hengli posted the largest increase, Shuanghuan ended its consecutive decline, and Inovance maintained the highest level of foreign ownership; Estun and Leaderdrive also showed signs of improvement or stability. By contrast, Supcon continued to contract, while Sanhua remained in a downtrend though the pace of decline narrowed at the margin.

Analysis framework

The report uses quarterly disclosed Stock Connect foreign shareholding data as the main framework, comparing covered names on a quarter-over-quarter basis and assessing changes in foreign allocation using historical peaks, recent lows, and consecutive quarterly trends. For cases where foreign shareholding exceeds 24%, the report also notes that exchanges would trigger daily disclosure, but as of 2026-07-14 none of the covered names had exceeded 24%.

Methodology notes

• Tracking fund flows and shareholding structureStock Connect foreign shareholding quarterly watch

  Observe changes in overseas capital allocation to A-share industrial automation names through the proportion of foreign shareholding via Stock Connect.

  After the regulatory adjustment in August 2024, the disclosure frequency of Stock Connect holdings changed from daily to quarterly; if total foreign ownership in a single company exceeds 24% of total share capital, daily disclosure resumes. The report uses quarterly data as of 2026-06-30 and notes that the next data set as of 2026-09-30 is expected to be released in early October 2026.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hengli

  One of the names with the most notable improvement in foreign shareholding

  Strengths

  Foreign shareholding rose 3.7 percentage points quarter over quarter to 12.8% in 2Q26, improving continuously since 4Q25.

  Weaknesses

  It has still not fully returned to the mid-2023 peak of about 14%.

  Comparison

  It posted the largest quarter-over-quarter increase among the names highlighted as improving in the report.

  Risks

  If the improvement cannot continue in subsequent quarters, the current foreign repositioning may be seen as only a temporary recovery.

• Shuanghuan

  Foreign shareholding rebounded significantly quarter over quarter

  Strengths

  Foreign shareholding rose 2.1 percentage points quarter over quarter to 11.6% in 2Q26, ending two consecutive quarters of decline.

  Weaknesses

  It previously experienced two consecutive quarters of declining foreign shareholding.

  Comparison

  Its quarter-over-quarter improvement was second only to Hengli.

  Risks

  Historically, daily disclosure was discontinued after total foreign ownership fell below 24%, so future visibility will depend more on quarterly data.

• Inovance

  The name with the highest foreign ownership ratio in the coverage universe

  Strengths

  Foreign shareholding reached 19.6% in 2Q26, up 0.9 percentage points quarter over quarter, recovering for two consecutive quarters from the recent low in 2Q25.

  Weaknesses

  Foreign ownership is already relatively high, so the room for incremental increases may be smaller than for low-positioned names.

  Comparison

  It has maintained the highest foreign shareholding ratio among covered names since surpassing Shuanghuan in 3Q25.

  Risks

  Its high ownership ratio may make it more sensitive to changes in foreign risk appetite.

• Estun

  A low-base improvement name

  Strengths

  Foreign shareholding rose 0.8 percentage points quarter over quarter in 2Q26.

  Weaknesses

  Foreign shareholding was only 3.1%, far below the peak above 25% in 2Q22.

  Comparison

  The direction of improvement was positive, but the absolute ownership level remained clearly low.

  Risks

  Improvement from a low base is still insufficient to prove that the foreign allocation trend has fully reversed.

• Leaderdrive

  Foreign shareholding was relatively stable with slight improvement

  Strengths

  Foreign shareholding was 5.1% in 2Q26, up 0.1 percentage points quarter over quarter, continuing the upward trend since 1Q25.

  Weaknesses

  The single-quarter improvement was small.

  Comparison

  Its performance was closer to a stable recovery rather than rapid position building.

  Risks

  If sector or stock-specific catalysts are insufficient, foreign shareholding may continue to change only slowly.

• Supcon

  A name with declining foreign shareholding

  Strengths

  The report did not provide any notable positive shareholding signals.

  Weaknesses

  Foreign shareholding fell to 1.6% in 2Q26, down 0.9 percentage points quarter over quarter, and has been shrinking continuously since 3Q23.

  Comparison

  It had the lowest foreign shareholding among the covered names.

  Risks

  Persistently low holdings may reflect weak foreign allocation preference or insufficient confidence.

• Sanhua

  Foreign shareholding remains in a downtrend, though the pace of decline has narrowed

  Strengths

  It declined by only 0.1 percentage points quarter over quarter in 2Q26, with a narrower drop.

  Weaknesses

  Foreign shareholding was 2.6%, sharply down from the peak of about 25% in 2Q22.

  Comparison

  Compared with Supcon, the decline was smaller; however, the long-term trend remains weak.

  Risks

  The low-ownership state after falling from prior highs may continue to suppress foreign investor attention.

• Yizumi

  One of the names covered in the charts

  Strengths

  The report's charts include the time series of foreign shareholding for Estun and Yizumi.

  Weaknesses

  The input text does not provide Yizumi's explicit foreign shareholding ratio or quarter-over-quarter change in 2Q26.

  Comparison

  There is no summary data available for direct comparison with other names.

  Risks

  Because key figures are missing, its foreign shareholding trend cannot be judged from the current text alone.

Key data

• Average foreign shareholding of covered portfolio7.5%2Q26 average, up 0.8 percentage points from 1Q26.
• Hengli foreign shareholding12.8%Up 3.7 percentage points quarter over quarter in 2Q26, improving continuously since 4Q25 and approaching the mid-2023 peak of about 14%.
• Shuanghuan foreign shareholding11.6%Up 2.1 percentage points quarter over quarter in 2Q26, ending the previous two-quarter decline.
• Inovance foreign shareholding19.6%Up 0.9 percentage points quarter over quarter in 2Q26, remaining the name with the highest foreign ownership ratio in the coverage universe.
• Estun foreign shareholding3.1%Up 0.8 percentage points quarter over quarter in 2Q26, but still significantly below the peak above 25% in 2Q22.
• Leaderdrive foreign shareholding5.1%Up 0.1 percentage points quarter over quarter in 2Q26, broadly stable and continuing the improving trend since 1Q25.
• Supcon foreign shareholding1.6%Down 0.9 percentage points quarter over quarter in 2Q26, continuing to contract since 3Q23.
• Sanhua foreign shareholding2.6%Down 0.1 percentage points quarter over quarter in 2Q26, still in a downtrend since the peak of about 25% in 2Q22, though the decline has narrowed.

Impact & implications

The marginal improvement in foreign shareholding may increase market attention on certain industrial automation leaders, especially Hengli, Shuanghuan, and Inovance; however, divergence remains clear, and the persistently low or declining holdings in Supcon and Sanhua indicate that foreign capital has not broadly returned to the sector. Investors should view changes in shareholding as indicators of capital preference and sentiment rather than standalone investment advice.

Risks

• Foreign shareholding data is an indicator of capital preference and is not equivalent to fundamental improvement or an investment rating.
• Since August 2024, Stock Connect holdings have been disclosed mainly on a quarterly basis, reducing visibility into short-term capital movements.
• If total foreign shareholding does not exceed 24%, daily disclosure will not be triggered, so the data timing may lag.
• Performance among covered names is clearly differentiated, and the improvement in average holdings may mask downside risks in individual stocks.
• The report discloses that Deutsche Bank may have conflicts of interest, and investors should treat this report as only one factor in investment decision-making.

What to watch

• The quarterly foreign shareholding data as of 2026-09-30, expected to be disclosed in early October 2026.
• Whether the improvement in foreign shareholding for Hengli and Shuanghuan can continue.
• Whether Inovance can continue to maintain the highest foreign shareholding ratio within the coverage universe.
• Whether Supcon's contraction in foreign shareholding since 3Q23 shows a turning point.
• Whether the narrowing decline in Sanhua's foreign shareholding can turn into stabilization or recovery.
• Whether any name's total foreign shareholding rises above 24% again, thereby triggering daily disclosure.