A rally in Chinese stocks, driven by excitement over DeepSeek and Unitree Robotics, lifted returns for several hedge and long-only funds last month. The MSCI China Index surged 12% in February and has extended gains this month by 3%. Investors are optimistic about the technology developments, with Zheng Fang, founder of Keywise Capital Management Ltd., stating that “Chinese equities may see a re-rating this year.” The emergence of DeepSeek’s lower-cost, open-source AI model and Unitree’s robotics technology has prompted investors to re-evaluate China’s technology development.
Keywise Capital Ltd.’s China hedge fund returned 39% during the month, while Triata Capital Ltd. posted a 58% return for 2024, driven by bullish bets on AI software and data center stocks. Viridian Asset Management made an estimated 6% in its best month since it started trading in August, also focusing on advanced manufacturing and information technology stocks.
Red Gate China Growth Fund finished the month up 8%, with returns driven mainly by robotics parts and components makers. The fund’s research team envisions an investment strategy revolving around robotics, as demand is expected to surpass electric vehicles and mobile phones combined. Alibaba has announced plans to spend more on AI over the next three years than it did in the past decade, showcasing a shift in management’s mindset.
Keywise Penguin Development Fund was up an estimated 5.9% in February, with most of that coming from Chinese tech companies. Xiaomi Corp. and BYD Co. are also well-positioned for AI-driven transformation, according to Keywise. The emergence of large-language models by Alibaba and Tencent may kick off a fresh AI expenditure and infrastructure cycle similar to the US two years ago.
As investor excitement builds, analysts are cautious about potential market valuations in the coming quarters, particularly for humanoid robotics stocks. However, the focus should be on identifying future winners and entrepreneurs behind them, rather than valuation. With investors from endowment funds in the US, Middle East, and Europe showing interest, the growth of China’s tech sector appears to be gaining momentum.
Source: https://finance.yahoo.com/news/hedge-fund-triata-gains-39-022816760.html