Asian Hedge Funds Bet Big on Chinese Tech Giants
As the world grapples with the implications of artificial intelligence, some Asian hedge funds are placing their bets on leading Chinese tech companies like Xiaomi and Baidu. Despite the looming threat of further U.S. curbs, these investors are drawn to the innovative AI products being developed for China’s massive home market.
AI Adoption on the Rise
Fund managers are particularly enthusiastic about the growing adoption of AI in the daily lives of China’s 1.4 billion people. From mobile phones and smart wearables to social apps and games, AI is becoming an integral part of Chinese life. “Chinese innovations are reaching end-users rapidly,” notes Nilesh Jasani, founder of GenInnov Funds. “We have been extremely excited by China’s ascendancy in mobility and mobiles, benefiting names like Xiaomi and Baidu.”
Baidu Leads the Charge
China’s leading search engine company, Baidu, has been making waves with its recent launch of a text-to-image generation tool for its ad clients. The company also plans to release AI glasses early next year and debut its robotaxi service outside mainland China. These developments have caught the attention of investors, who see immense potential in Baidu’s AI-powered products and services.
Xiaomi Offers Compelling Edge
Hong Kong hedge fund Monolith Management, which manages assets worth $300 million, has set its sights on smartphone maker Xiaomi and its suppliers. “Xiaomi offers compelling edge AI user experience through its self-developed HyperOS, with a larger ecosystem of IoTs and cars to tap into, compared to its Western counterparts,” said Timothy Wang, chief investment officer at Monolith.
Chinese Tech Stocks Poised for Growth
While Chinese tech stocks have lagged behind their U.S. counterparts in this year’s global AI frenzy, investors predict growth opportunities for China’s homegrown AI-powered products and services in the coming year. The advances would be driven by the proliferation and commercialisation of large language models, coupled with the country’s supply chain strengths and a wealth of skilled product managers.
Breakthroughs in AI Software
“We are seeing breakthroughs in AI software, such as text-to-video generation and multimodal AI,” said Sean Ho, CIO of Triata Capital, which manages $770 million in assets. “The high rankings of Chinese AI models on open-source platforms like Hugging Face reflect their ambition to lead globally, a trend that is unlikely to be derailed by ongoing tech conflicts.”
Not Everyone is Convinced
However, not everyone is convinced of the potential of Chinese tech stocks. Some investors remain skeptical, citing the dominance of U.S., Taiwan, and Japan semiconductor stocks in tech investors’ portfolios and their strong results. Ultimately, it comes down to whether AI can boost earnings growth, said Andy Maynard, head of equities at China Renaissance Securities.
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