Are China’s stocks as attractive as everyone suddenly thinks?

Along with the country’s stronger-than-anyone-suspected economic growth to start the year, China’s equities markets are also surprising most. That is, except of course for Asia Unhedged, which has been bullish on China all year.

An investor confidence index rose to 58.6 points, the highest level since January 2016, according to China Securities Investor Protection Fund, signaling fears of shockwaves from the government debt crackdowns are subsiding.

The fact is that Chinese stocks are tremendously underinvested. There are a lot of developments on multiple fronts that lead one to believe if you pick the right companies, you will find good value.

The big question mark is at what pace will the Chinese economy grow after the party congress next month and into next year. Economic data last week supported the consensus that the second half will see a slowdown, and a wave of further regulatory moves following the party congress will be coupled with less pressure on the part of government leaders to support the market.

But with all that in mind, the kind of transformation and destructive activities spearheaded by industry leaders such as Jack Ma and Pony Ma will continue. At the helm of Alibaba and Tencent, those two are at the forefront of a Chinese tech revolution that has helped spark the Chinese stock rally. While the S&P 500 Tech Index is up more than 20% this year, the MSCI China Information Technology Index has more than doubled that, up well over 50%.

These tech giants have clearly been given the green light to inject competition into an economy once dominated by state-owned enterprises. There will be less of a need to reform SOEs when they have become increasingly marginalized or forced to reform to survive, as state-owned banks already have been in certain areas to compete with Alibaba’s Ant Financial.

There are other huge shifts that will undoubtedly offer opportunities. For instance, the Chinese military’s growing influence in the economy. The broad-based technology drive in the armed forces is infusing technological modernization into various segments of the economy, which will benefit lots of companies. China is well on its way to becoming a self-sufficient military. This transformational activity is creating significant demand for new technology.

Another area worth watching is development in the west of China. The Belt and Road Initiative is making huge inroads in ways that never materialized with previous efforts. There has been a substantial uptick in economic activity. The best performing economies among first- and second-tier cities? Chengdu in Sichuan province and Chongqing right next door, according to a Milken Institute ranking published last week.