Chinese equity – spotlight on innovation driven themes
Key takeaways
- AI advancements in China have led to a re-rating in Chinese equities. Despite the year-to-date rally, China’s AI-related advancements have longer term implications for earnings, valuations, and overall fundamentals of Chinese equity beneficiaries
- DeepSeek’s new large language models (LLM) seem to be capable of achieving comparable performance with other existing LLMs but at significantly reduced costs, opening up opportunities for mass adoption of AI. This would lead to productivity gains and cost savings, paving the way for new business opportunities and revenue sources
- Various segments within the technology sector are expected to benefit from the accelerated adoption of AI models, including cloud platforms, application software, devices, and semiconductors
- Besides AI, Chinese companies have made impressive progress in robotics, electric vehicles, and innovative drugs - areas which also present interesting equity investment opportunities
- The government reiterated its support towards AI development during the Two Sessions in March, with policymakers pledging more efforts to support technological advancements. President Xi's symposium with high-profile tech leaders in February also showed China’s supportive stance towards the private sector, helping boost corporate confidence
- Our HSBC Chinese Equity strategy focuses on AI-related industries, humanoid robots, as well as consumption recovery themes
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