Chinese Tech Stocks Poised for Rebound as U.S. Tech Giants Expand

普徕仕 has released its 2025 mid-year investment outlook, highlighting significant shifts in the global financial landscape. The report suggests that the leadership of U.S. tech giants is expanding into broader markets, creating opportunities for value stocks, including those in China. This development is expected to benefit Chinese tech stocks, which have been under pressure due to regulatory challenges and geopolitical tensions.

普徕仕's Asia-Pacific region multi-asset solutions head, Thomas Poullaouec, has indicated that the Federal Reserve may only reduce interest rates once, or not at all, as part of a tightening financial environment. This cautious approach by the Fed is seen as a response to the current economic conditions, where long-term U.S. Treasury yields are nearing 5%. The report emphasizes that this environment could provide a window of opportunity for investors to capitalize on undervalued Chinese tech stocks.

The outlook also suggests that the current market dynamics, characterized by a tightening financial environment and the expansion of U.S. tech giants, could lead to a revaluation of Chinese tech stocks. Investors are advised to closely monitor the actions of the Federal Reserve and the broader economic indicators, as these factors will play a crucial role in determining the future performance of Chinese tech stocks.

普徕仕's stock portfolio expert, Wu Xin, highlights that DeepSeek reflects China's advancements in artificial intelligence, predicting that technological innovation will accelerate in the coming years. Despite challenges in computational power, China's strengths in AI application and commercialization present a competitive edge. This technological progress is expected to drive growth in the Chinese tech sector, offering investment opportunities.

Additionally, the Chinese consumption market is undergoing a transformation, with new consumption patterns emerging in areas such as collectibles, fresh beverages, snacks, and music. This evolving market landscape fosters innovation and growth, providing investors with opportunities relatively insulated from trade uncertainties. The report notes that the H-share and A-share markets are expected to outperform the broader market by the end of 2024, with returns exceeding 15%.

普徕仕's flexible emerging market bond strategy fund manager, Guan Zhi, points out that Asian local fixed-income assets offer higher return potential, lower volatility, and lower correlation with U.S. Treasuries compared to non-Asian equities. This makes them an attractive option for investors seeking better risk-adjusted returns in the current market environment.