US Big Tech rides AI wave, but China tech is lost at sea
Main U.S. indexes red; Nasdaq now down ~1.4%
Tech weakest S&P 500 sector; Energy leads gainers
Dollar up; crude rallies ~2%; gold, bitcoin off >1%
U.S. 10-Year Treasury yield jumps to ~3.87%
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
U.S. BIG TECH RIDES AI WAVE, BUT CHINA BIG TECH LOST AT SEA
Enthusiasm around generative AI has clearly lifted U.S. equities, and specifically large-cap tech indexes like the Nasdaq 100 .NDX. However, Jessica Rabe, co-founder of DataTrek Research, says you wouldn’t necessarily know we had just seen the advent of a new disruptive technology when looking at Chinese tech stocks.
Using the KraneShares CSI China Internet ETF KWEB.K as a proxy, Rabe notes that Chinese tech stocks, peaked in February 2021 and have lost ~75% of their collective value since. In fact, KWEB is trading back at levels seen in August 2013 when it first launched.
Meanwhile, the Invesco QQQ Trust QQQ.O, as a proxy for the NDX, is down around 5% from its all-time high reached on July 10th. YTD, QQQ has rallied about 17% vs KWEB’s more than 3% loss.
So why hasn’t Gen AI helped Chinese tech shares like their U.S. counterparts?
"Chinese tech stocks have dramatically underperformed the Nasdaq 100 since 2021 because that’s when the local government began its widespread crackdown on private enterprise," writes Rabe in a note.
China’s local Big Tech companies experienced huge growth during pandemic lockdowns, similar to U.S. Big Tech shares.
"Unlike in the U.S., however, China’s centrally controlled government launched investigations, imposed fines and implemented new regulations in the years that followed to equalize the imbalance of power between the private and public sectors," Rabe says.
Thus, her view is that this more authoritarian paradigm has, as a result, curtailed both Chinese tech companies’ growth and investor commitment to the space.
Rabe's bottom line is that Chinese tech stocks are a cautionary tale in that strict regulations can overwhelm the benefits of a new disruptive innovation such as Gen AI.
"This sector needs a major policy change in order to generate better investment returns, but markets believe (correctly, in our view) that this is not likely happening anytime soon," she writes.
DataTrek remains negative on Chinese tech stocks.
With this, Rabe cautions that since the sector dominates its country’s broader stock market, and that China makes up almost a quarter of MSCI Emerging Markets, investors should not forget when considering broad EM investments, that struggling Chinese tech stocks also weigh on EM performance more generally.
(Terence Gabriel)
*****
FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:
WHAT'S THE VALUE OF VALUATION? - CLICK HERE
JOBLESS CLAIMS, FLASH PMI, HOME SALES: MAKING THE RATE CUT CASE - CLICK HERE
U.S. STOCKS CHURN AROUND INTO JACKSON HOLE - CLICK HERE
DOW INDUSTRIALS: AMID RECENT SWINGS, TRADERS TURN TO CHARTS - CLICK HERE
THE CASE FOR MORE BALANCE BETWEEN EXPENSIVE TECH AND DEFENSIVES - CLICK HERE
FROM NATWEST TO BAE: ACTIVE FUNDS ADDING UK EXPOSURE - CLICK HERE
DOLLAR BULLS - CLICK HERE
RETAILERS LIFT STOXX, MINERS DRAG - CLICK HERE
TEPID START IN STORE FOR EUROPE - CLICK HERE
IT'S BEGINNING TO LOOK A LOT LIKE RATE CUTS - CLICK HERE
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
