The head of China's 10 billion private equity firm Renqiao Asset, Xia Junjie, has rarely spoken out, providing an in-depth analysis of the current market conundrum.
As a fund manager known for his contrarian investment approach, he has traditionally refrained from directly commenting on index trends, but this time he offered a penetrating interpretation of the weak performance of the Hang Seng Technology Index.
Xia Junjie pointed out that although the market logic has changed under the AI wave, leading to short-term pressure on technology stocks, this is more due to crowded capital rather than a collapse of the fundamentals.
He emphasized that in the current context of high volatility in U.S. stocks and complex geopolitical situations, &#34;cheap is a hard truth.&#34; Chinese assets, with their valuation advantages and resource barriers of leading enterprises, are becoming a relative safe haven in an uncertain environment, and their long-term allocation value is becoming increasingly clear.
<h2>The Soil for AI Bubble Expansion May No Longer Exist</h2>
Regarding the AI bubble theory, Xia Junjie believes that the market's focus is quietly shifting away from the computing power sector. Although its performance is being realized, the logic is being destroyed.
&#34;When everyone's attention gradually shifts from the capital expenditures of the seven major U.S. tech giants to free cash flow, the soil for the bubble to continue expanding may no longer exist.&#34;
He provided the following evidence:
Microsoft's stock price has fallen 30% from its peak, and despite Google's explosive data release, its stock has declined. The recent abnormal performance of Nvidia's stock after its quarterly report also seems to indicate that the underlying logic or narrative in the capital market has undergone a qualitative change.
Xia Junjie, skilled in contrarian investment, analyzed from a high-dimensional perspective:
&#34;When the future direction and pattern of AI become increasingly unclear, and each participant is running with their faces covered, there will always be rational individuals choosing to vote with their feet. This process may have quietly begun, even though it is currently just a non-mainstream noise, what is lacking is merely time.&#34;
<h2>The Hang Seng Technology Index Performs the Worst</h2>
Recently, the Hang Seng Technology Index has performed the worst among all indices, with a cumulative decline of over 25% since last October, now basically returning to the level of last April.
From the composition of this index, there are generally three asset categories: first, the internet; second, consumer electronics and technology hardware; third, automotive and home appliances.
Xia Junjie observed that the assets in these three industries may have their own respective issues.
For example, internet platform companies are actively or passively getting involved in the AI wave, with conservative risks and aggressive problems.
Additionally, consumer electronics and technology hardware are facing the objective reality of soaring storage prices;
Moreover, the automotive and home appliance sectors are experiencing weak sales following policy rollbacks.
Xia Junjie concluded that there are indeed certain objective facts behind the weakness of the Hang Seng Technology Index, which cannot be entirely considered &#34;collateral damage.&#34;
<h2>The Essence of the Decline</h2>
However, Xia Junjie has a more &#34;penetrating&#34; observation regarding the decline of this growth stock index:
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In the past two to three years, investors have been overly crowded in their allocation to the Hang Seng Technology Index, both overseas funds and mainland Hong Kong Stock Connect funds have been so, thus, the issue of capital may be greater than that of fundamentals.
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Following this logic, he believes that subsequent investment opportunities are beginning to become clear after this round of index decline
&#34;After all, these companies still represent the best batch of enterprises in China today. Even in the context of AI, it is not easy for new companies to replace them, and the high investment nature of AI also determines that these companies have an absolute advantage in capital and resources.&#34; He summarized.
In addition, this fund manager also provided a low-probability pessimistic judgment: historically, there have been instances where small companies have disrupted large companies, and we will remain vigilant, but clearly, it will not be now.
<h2>Cheap is the Hard Truth</h2>
Since the beginning of this year, the U.S. stock market has experienced high volatility, while the Korean and Japanese stock markets have risen significantly. In the future, these markets indeed have the potential for substantial fluctuations. Coupled with the recent rapid evolution of the situation in the Middle East, the investment environment is clearly becoming more complex.
Based on this, Xia Junjie told investors: The more complex the market, the more one truth remains unchanged: that is, cheap is the hard truth.
Finally, he positioned Chinese assets from an international market perspective:
Chinese assets are still the cheapest and most stable assets among the major markets today. Such assets will become a relative safe haven in an uncertain environment, and what determines the trend of our market is still internal factors, not external ones

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Chinese assets, leveraging valuation advantages and the resource barriers of leading enterprises, are becoming a relative safe haven in an uncertain environment, with their long-term allocation value becoming increasingly clear

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E Fund CNI Value 100 ETF

Hang Seng TECH ETF I

Tianhong Hang Seng TECH ETF(QDII)

Dacheng Hang Seng Technology ETF(QDII)

SZSE SME 100 Index

Huatai-PB CSOP Hang Seng Technology ETF(QDII)

CSI 300

Shunkong Development

Fortune SG SSE 180 Value ETF

China Southern Hang Seng ETF Feeder Fund-A

China Southern Hang Seng ETF

CHOHO

ChinaAMC Hang Seng Technology ETF(QDII)

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Billion-dollar fund manager Xia Junjie: Chinese stocks are the cheapest mainstream assets, and the soil for AI bubbles may not exist