US Media: US Investors Bet on China's AI

US lawmakers are urging stricter restrictions on capital flowing into China, citing national security concerns. Recently, US House Speaker Johnson made a hardline statement, saying that any investment supporting China must stop, and the Defense Authorization Act being voted on in Congress will also strengthen the regulations from the Biden era that limit US investments in China's high-tech industries such as artificial intelligence (AI). However, according to a report by the US "Wall Street Journal" on the 11th, despite this, US investors are still investing heavily in Chinese companies involved in this field and injecting funds into exchange-traded funds (ETFs) tracking the Chinese tech sector.

The report said that despite Washington's strict scrutiny, after Chinese AI models led by DeepSeek have shown the ability to compete with their US counterparts this year, US public market investors are increasingly attracted to China's investment opportunities. With the support of capital, the shares of Alibaba listed in Hong Kong and New York have risen more than 80% this year, reaching a four-year high. The stock prices of Chinese tech companies Tencent and Baidu have also increased by nearly 50%. Unlike US companies pursuing ultra-advanced large models, China has already started to widely apply AI.

BlackRock said in July that the capital inflow into ETFs tracking the broader Chinese tech sector exceeded that of the US this year. In that month, US investors accounted for 15% of the capital inflows into Chinese tech ETFs. According to data from the London Stock Exchange Group, since July, the scale of two major funds tracking Chinese stocks has further increased. The KraneShares China Internet Index ETF, based in New York, increased by $1.4 billion, reaching nearly $9 billion; the State Street China Technology ETF listed in the US grew more than double, reaching nearly $3 billion.

London-based investment firm Ruffer also said that the growth potential of Chinese-listed tech giants is greater, "the price-to-earnings ratio of Chinese tech giants is much lower than that of US counterparts like Alphabet, the parent company of Google." Data shows that the Hang Seng Index has a P/E ratio of only 13.61 times, less than half of the Nasdaq's 33.8 times.

Vincent Lu, head of the Australian asset management company BMO Group, said, "The bubble risk of Chinese AI companies seems much smaller than that of the US." Chinese AI company valuations are about a quarter of their US counterparts, and R&D costs are lower. This is just one of many investors interested in China's AI. According to a report by US CNBC website, at least three AI-focused funds based in China have raised hundreds of millions of dollars from overseas investors this month alone.

Political efforts to restrict investment contradict the nature of the market's pursuit of profit. "Legislators' attempts to restrict capital flows run counter to Wall Street's hope to profit from economic prosperity," the Wall Street Journal commented. Wang Ying, a stock strategist at Morgan Stanley based in Hong Kong, said that when she met with US investors, she found that due to the increasing appeal of Chinese companies in AI-driven robotics and biotechnology fields, 90% of investors want to increase their exposure to China, which is the highest level of interest in four years. (Reporter Li Xundian, Global Times)

Original: toutiao.com/article/1851262864368780/

Statement: This article represents the views of the author himself.