Key takeaways

• The YTD performance gap between China’s A-shares (e.g. CSI300: +8.4%) and the MSCI China Index (-15.5%) or Hang Seng Index (-10.0%) is material. The gap is even wider in the tech space. Year-to-date, the ChiNext Index, a Nasdaq-style board on the Shenzhen Stock Exchange, recorded 36.5% of return vs HSTECH’s -20.1%.
• While this is to some extent reflective of the structure of the global AI rally so far, the difference is amplified by China’s K-shape economic story. For that reason, we currently prefer A-shares over H-shares, driven primarily by A-share’s much larger exposure to AI-related hardware beneficiaries.
• Having said that, we believe it’s important to be positioned in the full-arc AI opportunity set in China, which means taking exposure to some of the large offshore listed internet and cloud players, which are critical enablers of AI transition and adoption.

Please refer to the full report for details about the event and our investment view.

“Overweight” implies a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

“Underweight” implies a negative tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

“Neutral” implies neither a particularly negative nor a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/chinas-bifurcated-economy-and-the-full-arc-ai-opportunity/