AI interest lifts China’s Star 50 tech stocks far above US valuations

In short: Chinese tech stocks linked to AI are rising fast, and investors are valuing them much more highly than similar US stocks.

What's going on

Chinese tech shares have climbed this year as local investors pour money into companies connected to artificial intelligence, or AI (computer systems that can produce text, images, or decisions). Shanghai’s Star 50 index, which tracks 50 large and heavily traded tech companies, is up 29% so far this year. That is far ahead of the broader CSI 300 index, which is up 0.9%, and Hong Kong’s Hang Seng index, which is down 1.5%.

These stocks are also expensive by common market measures. The Star 50 is trading at a price-to-earnings ratio of more than 150, which is a way of comparing a company’s share price to its profits (like paying many years of earnings up front). By comparison, the US Nasdaq 100 is around 35.

The Financial Times reports that part of this demand comes from Chinese households looking for new places to invest after a housing downturn. Fund managers also say investors believe China’s AI industry can compete with well-funded US rivals.

Recent examples include Moonshot’s Kimi K3, described as China’s largest AI model to date, and strong interest in new listings. Humanoid robotics company Unitree’s upcoming listing was more than 5,500 times oversubscribed, meaning people asked to buy far more shares than were available (like a concert that sells out instantly).

What to watch

China’s government has supported the push, including state-backed funds buying shares during market swings and exchanges loosening listing rules for some unprofitable tech firms. Investors will be watching whether earnings actually grow enough to justify today’s high prices, especially as parts of China’s economy remain weak.

Source: Financial Times