Chinese fund managers’ pursuit of AI plays backfires as hot tech stocks wobble

Chinese fund managers’ pursuit of AI plays backfires as hot tech stocks wobble AI bets have been unravelling globally amid doubts about the investment returns on cloud-service infrastructure A shift to technology stocks by China’s most seasoned fund managers has backfired, with the unwinding of AI plays taking a toll on the performances of their products. Funds run by some star managers with a value-investing approach all recorded declines in net asset values last month after they switched to chipmakers and the manufacturers of optical transceivers and out of long-held consumer bets in the second quarter. Technology stocks listed in mainland China suffered their biggest monthly declines in July, aligning with a global unravelling of artificial intelligence bets amid doubts about the investment returns on cloud-service infrastructure. The pursuit of hot tech stocks by China’s most influential fund managers, driven by the fear of missing out on the AI frenzy and a marked contrast to the value-investing approach they were known for, probably saw them buy at the peak of the boom. Meanwhile, the consumer stocks they had abandoned rebounded as they piled into technology stocks at elevated prices. The fund managed by Liu Yanchun at Great Wall Invesco Fund Management logged a 28 per cent decline in value last month after it bought into optical transceiver maker Zhongji Innolight, Konfoong Materials International and other tech stocks in the second quarter and cut long-held positions on consumer and pharmaceutical stocks. Liu’s fund added a co-money manager in May, a move that investors interpreted as steering the portfolio more towards the tech sector. Zhang Kun, who manages what was once the mainland’s biggest equity mutual fund at E Fund Management, was rattled by the turmoil as well. His flagship fund fell 1.2 per cent in value in July after Zhang pivoted to AI in the second quarter. [Image text:] 334+7.09% 102+7.5% 183+5.10%