China Tech Stocks Narrow Into AI and Semiconductors Amid Macro Drag
CNBC reported Sunday that investors hunting for returns in Chinese equities are increasingly concentrating on China AI stocks and semiconductor names, even as broader economic data continues to soften.
AI and Hard Tech Emerge as the Clearest China Trade
Portfolio manager Leonid Mironov of Gavekal told CNBC that artificial intelligence is currently “the cleanest and most obvious theme” available in Chinese equities. His newly approved China stock fund allocates more than half its holdings to semiconductors, high-tech manufacturing, and domestic self-sufficiency plays. Consumer and healthcare names account for just 6% of the portfolio.
Liqian Ren, director of modern alpha at WisdomTree, echoed that view. She told CNBC that AI ecosystem companies are delivering solid earnings growth. She cautioned, however, that the sector is not large enough to lift China’s entire macro environment, describing the recovery as “really, really uneven.”
The Rally Has Grown Narrower, Not Broader
Aaron Costello, head of Asia investment strategy at Cambridge Associates, offered a note of caution. He told CNBC that equity leadership has shifted considerably over the past two months. What once looked like broad tech outperformance has compressed into a very tight cluster of semiconductors, software, and hyperscalers. He said calling it a general tech rally is no longer accurate.
That narrowing has a geographic dimension as well. Hardware and chip stocks tend to list on mainland Chinese exchanges rather than in Hong Kong. The CSI 300 index of Shanghai and Shenzhen-listed companies has gained more than 4.5% this year. The Hang Seng Index, by contrast, is roughly flat over the same period.
Background: Consumer Weakness Frames the Rotation
April retail sales data released by Beijing showed the slowest consumer spending growth since the end of Covid-19 restrictions, underscoring why fund managers are sidestepping domestic consumption plays. Publicly listed proxies for China’s AI buildout have multiplied in recent years as homegrown semiconductor and model companies have come to market, filling a gap left by private giants such as ByteDance and Huawei.
Where Fund Managers Are Placing Bets
Mironov told CNBC his two largest positions are Tencent and Alibaba, supplemented by mainland-listed hardware names including Anji Microelectronics. He remains on the sidelines for Hong Kong-listed AI model companies Zhipu and MiniMax, citing uncertainty around sustainable business models. Morgan Stanley takes the opposite view, holding overweight ratings on both firms alongside Alibaba and Shanghai-listed chip designer Cambricon, where the bank carries a price target of 2,000 yuan, or roughly $294.
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