Global investors are increasing their bets on Chinese AI companies, betting on the next DeepSeek and looking to diversify, as concerns grow about a speculative bubble in the sector on Wall Street. Demand for Chinese AI companies is also spurred by Beijing’s push toward technological independence. China has accelerated the IPOs of chipmakers, notably Moore Threads, dubbed “China’s Nvidia,” and MetaX, which debuted this month.
Foreigners see China closing the technology gap with the U.S. as Beijing steps up its support for AI chipmakers, spurring bets on Chinese companies just as concerns grow over the lofty valuations of U.S.-listed AI stocks.
UK-based asset manager Ruffer, for example, said it has “deliberately limited exposure” to the Magnificent Seven (US tech giants) and is looking to add positions in Alibaba for greater exposure to China’s AI theme. “While the US remains a leader in cutting-edge AI, China is rapidly closing the gap,” said Gemma Cairns-Smith, an investment specialist at Ruffer. “The advantage may not be as wide or as deep as many believe… The competitive landscape is changing.”
Ruffer is gaining exposure to the AI theme through Chinese tech giants like Alibaba, which operates an AI chip unit, owns the large Qwen language model and is pouring money into cloud infrastructure.
Global asset managers are increasingly interested in Chinese AI companies as a wave of startups list on the mainland and in Hong Kong, seeking to tap into growing investor appetite following the meteoric rise of DeepSeek, China’s answer to ChatGPT.
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Global investors turn to Chinese AI amid fears of a Wall Street bubble
In a report this month, UBS Global Wealth Management called Chinese technology “the most attractive,” citing investors’ pursuit of geographic diversification and China’s “strong political support, technological self-sufficiency and rapid monetization of AI.”
The Nasdaq, with its strong tech component, currently trades at 31 times earnings, compared with a multiple of 24 for Hong Kong’s Hang Seng Tech, which enables AI bets through stocks such as Alibaba and Baidu, Tencent and chip foundry SMIC.
Building on this momentum, US investment advisor Rayliant helped launch a Nasdaq-listed fund in September that gives investors access to “Chinese versions of stocks like Google, Meta, Tesla, Apple and OpenAI.”
For his part, KraneShares chief investment officer Brendan Ahern said the rapid rise of Chinese AI chipmakers like Cambricon speaks to the scale and speed of innovation in China’s AI and semiconductor industries.
“The element of this racial narrative, this urgency, benefits companies,” he said, referring to the bitter Sino-US tech war. It’s like shouting “Fire!”, right? When it becomes an emergency, it gets a lot of attention.
KraneShares’s exchange-traded fund, called KWEB, which invests in overseas-listed Chinese stocks including Tencent, Alibaba and Baidu, has risen by two-thirds this year to nearly $9 billion.
With information from Reuters.
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