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What's Behind the Surge in Chinese Tech Stocks & ETFs?
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Chinese tech stocks have been red hot lately, while the Magnificent Seven have lost some of their shine. The Hang Seng Tech Index, which tracks the 30 largest tech stocks listed in Hong Kong, is up 30% year-to-date.
Investors have been piling into these stocks since DeepSeek's breakthrough. While many questions remain about DeepSeek, its AI was likely developed at a fraction of the cost of its U.S. competitors and without access to NVIDIA’s (NVDA - Free Report) most advanced chips. This suggests that China is not far behind the U.S. in the AI race.
On Monday, Chinese President Xi Jinping met with tech leaders, signaling that Beijing’s regulatory crackdown on the sector—which began in 2020—is over. Chinese tech giants lost hundreds of billions in market cap, and despite the recent recovery, their shares remain far below their previous peaks.
Alibaba (BABA - Free Report) stock has surged more than 50% this year, thanks in part to its AI partnership with Apple (AAPL - Free Report) to roll out the iPhone maker’s AI features in China.
Goldman Sachs raised its target price for Chinese stocks on Monday, estimating that AI adoption could boost earnings growth and potentially attract $200 billion in inflows.
Compelling valuations have also drawn some foreign investors to Chinese equities. Some institutional investors have pulled money out of relatively expensive Indian markets and shifted into Chinese stocks.
It remains to be seen whether this rally can continue. In October last year, Chinese stocks surged after policymakers introduced sweeping stimulus measures to boost growth.
Billionaire investor David Tepper told CNBC at the time that he was bullish on Chinese equities, saying he had bought "everything" related to China. However, the rally later lost steam.
Beyond President Trump’s tariffs, other macroeconomic and geopolitical risks could present headwinds to this rally.
The KraneShares CSI China Internet ETF (KWEB - Free Report) provides exposure to Chinese internet companies listed on Hong Kong or U.S. exchanges.
The Invesco China Technology ETF (CQQQ - Free Report) holds Chinese technology stocks, while the iShares China Large-Cap ETF (FXI - Free Report) invests in large-cap Chinese equities trading on the Hong Kong Stock Exchange.
What's Behind the Surge in Chinese Tech Stocks & ETFs?
Chinese tech stocks have been red hot lately, while the Magnificent Seven have lost some of their shine. The Hang Seng Tech Index, which tracks the 30 largest tech stocks listed in Hong Kong, is up 30% year-to-date.
Investors have been piling into these stocks since DeepSeek's breakthrough. While many questions remain about DeepSeek, its AI was likely developed at a fraction of the cost of its U.S. competitors and without access to NVIDIA’s (NVDA - Free Report) most advanced chips. This suggests that China is not far behind the U.S. in the AI race.
On Monday, Chinese President Xi Jinping met with tech leaders, signaling that Beijing’s regulatory crackdown on the sector—which began in 2020—is over. Chinese tech giants lost hundreds of billions in market cap, and despite the recent recovery, their shares remain far below their previous peaks.
Alibaba (BABA - Free Report) stock has surged more than 50% this year, thanks in part to its AI partnership with Apple (AAPL - Free Report) to roll out the iPhone maker’s AI features in China.
Goldman Sachs raised its target price for Chinese stocks on Monday, estimating that AI adoption could boost earnings growth and potentially attract $200 billion in inflows.
Compelling valuations have also drawn some foreign investors to Chinese equities. Some institutional investors have pulled money out of relatively expensive Indian markets and shifted into Chinese stocks.
It remains to be seen whether this rally can continue. In October last year, Chinese stocks surged after policymakers introduced sweeping stimulus measures to boost growth.
Billionaire investor David Tepper told CNBC at the time that he was bullish on Chinese equities, saying he had bought "everything" related to China. However, the rally later lost steam.
Beyond President Trump’s tariffs, other macroeconomic and geopolitical risks could present headwinds to this rally.
The KraneShares CSI China Internet ETF (KWEB - Free Report) provides exposure to Chinese internet companies listed on Hong Kong or U.S. exchanges.
The Invesco China Technology ETF (CQQQ - Free Report) holds Chinese technology stocks, while the iShares China Large-Cap ETF (FXI - Free Report) invests in large-cap Chinese equities trading on the Hong Kong Stock Exchange.
Alibaba (BABA - Free Report) , Tencent Holdings (TCEHY - Free Report) , JD.com (JD - Free Report) , and Pinduoduo (PDD - Free Report) are among the top holdings in these ETFs.
To learn more, please watch the short video above.