Rather than fearing the potential for AI disruption, investors in mainland China and Hong Kong are aggressively pursuing perceived winners.
While Wall Street is gripped by the "AI fear trade," with investors dumping software and asset management stocks out of fear of disruption, the Chinese market is moving in the opposite direction.
This optimism is driven by AI's potential to penetrate new markets and dramatically reduce costs for end users. This has created a sharp divergence between the two largest economies. As a result, the valuations of local favorites like MiniMax Group Inc. (HK: 970) and Knowledge Atlas Technology JSC Ltd. (Zhipu) (HK: 725) have soared.
In February alone, these stocks more than doubled. This was fueled by capital rotation from traditional internet giants like Alibaba and Tencent into pure-play AI companies. Strategic isolation—thanks to regulatory barriers that limit foreign models like OpenAI—has given these domestic players a clear, uncontested opportunity in the local market.
Domestic Dominance and the Performance Halo Effect
The euphoria in Chinese AI is fueled by the "halo effect" of massive global private funding rounds. With OpenAI reportedly targeting a valuation exceeding $850 billion and Anthropic raising funds at $380 billion, Chinese companies are experiencing significant revaluation.