In a situation that stands in stark contrast to global conservatism, investors are pouring money into China’s IT, media, and telecom shares as speculation about chatbot development crowds out other industries.
Indexes for computers, communications equipment, and media in mainland China have increased by 29% to 35% this year, outpacing the benchmark CSI 300 Index’s increase of just 3.5%.
According to data by China Merchants Securities, there was a record-high concentration of trading volume on some days, including many last week, when turnover in tech, media, and telecom (TMT) companies accounted for more than 40% of all market transaction.
Investors claim they are purchasing in the anticipation that bots like Microsoft’s ChatGPT would revolutionise the industry, reduce costs, and provide new opportunities for growth.
Analysts believe gains might become unstable, and there are already some evidence it is distorting markets, as fear of missing out drives the surge to new heights.
Niu Chunbao, a fund manager at Wanji Asset Management, concerned he was missing the surge and recently bought AI stocks after reducing exposure to new energy in February. “In the stockmarket, AI will be an incredible opportunity,” he said.
Exchange-traded funds are receiving capital as well, according to Cinda Securities’ data, with TMT-focused funds collecting net inflows of 4 billion yuan ($580 million) during the past three months, among the largest such purchases in any sector.
Even though the chipmaker Cambricon Technologies Inc. has been losing money since 2017, an impressive triple in share price has increased the company’s market value above $10 billion.
Even though Beijing Haitian Ruisheng Science Technology warned investors it did not envision significant order growth provided by artificial intelligence-generated content, the company’s shares had increased by fourfold (AIGC).
Yao Pei, chief strategist of Hua Chuang Securities, declared that “the AIGC trade is clearly overheated.”
Nonetheless, some believe that victors will eventually emerge given China’s government’s support for technological advancement, even if there is a washout in the market initially.
According to Yuan Yuwei, fund manager at Water Wisdom Asset Management, the majority of the companies that increased in value during the frenzy are garbage stocks that have no long-term value and are just Ponzi schemes.
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