Investment analysts are currently advocating for a focus on artificial intelligence (AI)-related stocks in the Chinese market, despite signs of slower economic growth. Leonid Mironov, a portfolio manager at Gavekal, emphasized that AI represents a clear investment theme, noting that over half of his newly approved China stock fund is concentrated in sectors such as semiconductors, high-tech manufacturing, and self-sufficiency. In contrast, only 6% of the fund is allocated to consumer and healthcare sectors.
April’s retail sales growth in China marked the weakest performance since the end of the COVID-19 pandemic, amplifying concerns about the broader economy. Liqian Ren, director of modern alpha at WisdomTree, stated the earnings for companies within the AI ecosystem are robust, but insufficient to bolster the overall macroeconomic landscape, highlighting that growth is "really, really uneven."
In recent months, there has been a notable shift in tech stocks, according to Aaron Costello, head of Asia investment strategy at Cambridge Associates. He pointed out that the focus has narrowed towards semiconductors and software, rather than a broad technology sector. The performance of technology stocks has been divergent as well, with the CSI 300 index up over 4.5% this year, while Hong Kong’s Hang Seng Index remains stagnant.
Mironov’s fund maintains significant positions in companies like Tencent and Alibaba, along with smaller hardware firms like Anji Microelectronics. While investment interest in AI model companies such as Zhipu and MiniMax is growing, Mironov is cautious, seeking evidence of their sustainability. This perspective contrasts with Morgan Stanley’s strategy, which favors both AI model companies and the Shanghai-listed chip company Cambricon, setting a price target of 2,000 yuan ($294).
Why this story matters
Key takeaway
Opposing viewpoint
