What key factors are driving the rally in Chinese tech stocks?

CGTN Europe interviewed Zhang Zhiwei, President & Chief Economist at Pinpoint Asset Management

Transcript

00:00Chinese tech stocks have rallied this week after President Xi Jinping's meeting with private companies.

00:06The emergence of the Chinese AI startup DeepSeek and the President's support for the private sector boosted stocks.

00:13Investment banks say the outlook particularly for tech shares is moving from investable to tradable.

00:20Zhang Zhewei is President and Chief Economist at Pinpoint Asset Management.

00:26I think it's a really big change of outlook for investors in China as well as foreigners.

00:35Because in the past, people thought, including myself, that the AI technology in China would be constrained for years to come

00:45and it would be lagging the global leaders by not months, quarters, but years.

00:52So that's the general consensus.

00:55But now I think people understand that the technology developed onshore in China

01:02and this is completely driven by domestic talents that are just as competitive as the best firms in the U.S.

01:12So I think that constraint that people thought, particularly from the hardware capacity,

01:19is not as biting as people thought before. I think that's a very big surprise.

01:25You mentioned the idea of a trade war, trade tariffs.

01:29Do you think that geopolitical tensions, regulatory shifts perhaps, other factors

01:35might change the way investors see Chinese tech stocks in the future?

01:40Yeah, I think that's still a risk that investors are very much concerned and keep watching.

01:47But this is an evolving sort of long-term risk that is everywhere.

01:53It's not just about China. It's happening globally in many countries.

01:58But I think what changed from an investor's perspective is that the strength of these domestic players,

02:09of some of these private entrepreneurs onshore in China,

02:13turns out to be a lot more competitive than we thought before.

02:18So the way they can manage to deal with the geopolitical risk or other constraints that impose to them

02:25seems to be very impressive.

02:27And so that investors now I think have a lot more confidence for these firms to deliver for the years to come.

02:36So has there been an evolution, if you like, among investors for Chinese tech stocks?

02:41What's the appetite for them now?

02:44I think in the past few weeks we've seen both domestic investors as well as foreign investors

02:51putting money into the equity market in Hong Kong as well as in Shanghai,

02:56and particularly favouring those technology stocks.

03:01And there's very interesting development happening on the firm level that the more people look into,

03:09the more value that people discover.

03:12Particularly in the past few years these technology stocks in China didn't perform that well,

03:17so valuation-wise it's quite attractive.

03:20So I think global investors are now looking at China tech stocks in a very different way.

03:26And we do see capital flows into these stocks.