Asian hedge funds bet on Chinese AI giants despite US risks

Some Asian hedge funds are placing their bets on large Chinese tech companies like Xiaomi and Baidu due to their advancements in artificial intelligence, even in the face of potential additional US restrictions that may come into play next year.

The US ban on advanced chip exports to China has deterred global investors, but some see potential in Chinese firms developing AI products for the domestic market. Valuations are lower than US peers.

Fund managers are optimistic about the increasing adoption of AI in China, impacting the lives of its 1.4 billion people through mobile devices, wearables, social apps, and games.

“Chinese innovations are reaching end-users rapidly,” said Nilesh Jasani, founder of GenInnov Funds and former vice chairman for Asia at Jefferies.

“We have been extremely excited by China’s ascendancy in mobility and mobiles, benefiting names like Xiaomi and Baidu,” he said, noting his fund has been raising exposure to China.

Baidu, a top search engine in China, introduced a new text-to-image tool for advertisers. They will also launch AI glasses and expand their robotaxi service globally.

Hong Kong hedge fund Monolith Management, with $300 million in assets, is targeting Xiaomi and its suppliers.

“Xiaomi offers compelling edge AI user experience through its self-developed HyperOS, with a larger ecosystem of IoTs and cars to tap into, compared to its Western counterparts,” said Timothy Wang, chief investment officer at Monolith.

Attribution: Reuters

Subediting: M. S. Salama