Title: Soochow’s Top China Fund Eyes AI Stocks for Recovery, Expects Triple Bottom in Onshore Market
China’s best-performing mutual fund, the Soochow Mobile Internet Flexible Allocation Mixed Fund, has set its sights on the recovery of onshore equities, with a strong focus on artificial intelligence (AI) stocks.
According to the fund’s first-half filing, it believes that the onshore market is currently trading at a triple bottom, indicating that the worst is over in terms of policies, earnings, and valuations. As a result, the fund plans to maintain a high exposure to stocks for the remainder of the year, as it anticipates relatively little downside risk.
The fund’s top holdings at the end of the first half included Luxshare Precision Industry Co., a leading electronics supplier, Huizhou Desay Sv Automotive Co., an auto components maker, and Will Semiconductor Co. Additionally, the fund increased its exposure to Iflytek Co. and Suzhou TFC Optical Communication Co. in the three months leading up to June.
The recent debate among investors revolves around whether Chinese equities have hit a bottom. Signs of further policy support and the end of the tech sector crackdown have fueled hopes of a market recovery. In fact, global funds bought the most local shares since January, potentially signaling a turning point for the market.
The Soochow Mobile fund has notably outperformed over 2,000 other vehicles, delivering a remarkable 75% return so far this year, according to East Money Information Co., a fund tracker. In comparison, the CSI 300 Index has only risen by less than 1% since the end of December.
Managers of the Soochow Mobile fund, which oversees around $38 million, believe that the onshore stock market will enter a tech era within the next three to five years. They anticipate that AI and the policy drive for a digital economy will fuel a new growth engine.
Furthermore, the fund remains optimistic about the semiconductor industry for the next six months, expecting an improvement in fundamentals. The filing stated that the application of ChatGPT may lead to smarter hardware and trigger a cycle of replacements in consumer devices.
Soochow’s Mobile fund’s bullish stance on AI stocks and its prediction of a tech era align with expectations of a recovery in the onshore equity market. Investors are closely watching these developments as they look for opportunities in the Chinese AI sector, which is exhibiting significant growth prospects.
Overall, the Soochow Mobile fund’s performance, coupled with its strategic positioning, signifies its confidence in the recovery potential of onshore equities, particularly in AI stocks. As the market undergoes a transformative shift towards digitalization, the fund seeks to capture the opportunities emerging within the tech sector, aiming for continued success in the years to come.
