The View Beyond: China after the AI correction

The global AI infrastructure sector is undergoing a significant correction, yet the structural uptrend remains intact despite near-term volatility and the need for clearer capital expenditure guidance from US hyperscalers. Investors are rotating capital toward "old tech" sectors like internet, EV, and biotech, which offer value as the economy shifts toward a K-shaped recovery. While China’s second-quarter GDP growth dipped, exports remain strong, and policymakers are maintaining a steady course, prioritizing high-value industries over property sector investment. Meanwhile, the Federal Reserve faces a challenging environment with persistent inflation and potential liquidity constraints, complicating risk asset pricing. The Chinese yuan remains fundamentally undervalued, supported by record trade surpluses, and is positioned for long-term appreciation despite temporary consolidation as the US dollar finds footing. Hong Hao, CIO of Lotus Asset Management, provides these insights on navigating current market shifts and policy landscapes.