China's AI trade accelerates
Welcome back. While the US averages are jumping on the hopes that the Fed could start cutting interest rates sometime soon, there’s another part of the world that’s also seeing a market rally here. Tribosa takes a look at that for today’s tech Check. D That place is coming off a low base. Yes, it is. And what you’re referring to it is China. So call it the unwinding of a trade that’s worked for most of the year in the last year. That’s long AI, long Japan, short China. And it may be even the flipping of that theme that we’re seeing. Look at American AI Beneficiary chip names, AMD, Broadcom, ARM, Qualcomm. They have underperformed the broader market over the last month. Two is in the red over that period. SMS SMIC though that is Chinas largest chip maker listed in Hong Kong has held up better and it’s really been the big Chinese Internet names tencentalibabajd.com, PD that have led the rebound suggesting that their own AI trade is gaining momentum and helping Hong Kong to take the title as world’s best performing stock market in April. It has continued to move up another 5% this week alone, almost 5% I should say. There is though always this question of whether Chinese stocks are actually investable at all, because you never know what Beijing is going to do. So on the surface, this rally does look technical. But on the AI front, the fundamentals are building. China is a world leader in research, and a study from Georgetown University published this week found that China leads the US as a top producer of research in more than half of AI hottest fields like large language models and distributed machine learning. The Apple earnings guys Another potential data point China sales are falling in. Counterpoint research says consumers are citing the absence of major advancements in hardware and performance. As a reason to refrain from buying new iPhones, while Huawei, which has made a lot of ground, is offering some of those features, raising the stakes for WWDC, guys, Leslie really, I mean, Deirdre, Leslie and I were talking in the break really quickly. As you talk about this is the story for investing in China limited to only those big cap tech companies? Certainly not those are the ones that have been leading the rally. But you’ve got Beijing talking about supporting the market, so that could lift a whole lot more with it. Excellent, Deirdre, thank you very much.