The View Beyond: China’s old and new tech divide

The Chinese market exhibits a profound K-shaped divergence, where traditional sectors struggle amidst economic deceleration while AI infrastructure and high-value manufacturing thrive. This structural shift reflects a broader transition as policymakers prioritize new industries over real estate, leading to a decline in traditional industrial output. Meanwhile, aggressive IPO activity is siphoning liquidity from secondary markets, creating a challenging environment for investors. Despite current volatility and astronomical valuations in AI-related stocks, these sectors remain central to China’s growth strategy. Gold, currently undergoing a technical correction, remains a vital long-term hedge as central banks diversify reserves away from the US dollar. Hong Hao, CIO of Lotus Asset Management, emphasizes that while short-term rebounds are possible, investors should remain cautious as the market navigates this period of intense volatility and structural realignment.