Haitong Securities: China tech bubble risk low, favors domestic AI chain and hardware materials
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Haitong Securities research indicates that the risk of a bubble in China's technology sector is low, though local micro-structural issues still need time to be absorbed. The firm expects the sector to strengthen further, citing that China's AI development by 2027 has independent narrative and financial conditions. Haitong recommends diversified allocation while maintaining a positive view on AI industry-driven tech sector opportunities. It advises focusing on the domestic computing chain benefiting from improved domestic AI capabilities and policy support, specifically recommending domestic chips, semiconductor equipment and materials. Additionally, it highlights hardware and materials sectors with rising bargaining power, such as communication equipment, PCBs, and upstream materials. Key risks include a global liquidity tightening beyond expectations, slower-than-expected AI commercialization and data center investment, and the failure of historical patterns.
Source report
Guotai Haitan Securities has assessed that the risk of a bubble in China's technology sector remains low. While certain microstructural issues at the local level may require time to resolve, the sector is expected to strengthen further.
According to the brokerage, China's AI development by 2027 possesses independent narrative momentum and favorable financial conditions. The firm is optimistic about the domestic supply chain and critical hardware material segments facing supply constraints.
Investment Recommendations
The institution advises investors to maintain appropriately diversified allocations while continuing to focus on AI-driven opportunities within the technology sector. Key areas of focus include:
- Domestic computing power chain, benefiting from:
- Enhanced domestic AI capabilities
- Policy-driven support
- Recommended sectors:
- Domestic chips
- Semiconductor equipment and materials
- Hardware and materials with rising industry bargaining power, including:
- Communication equipment
- PCB (Printed Circuit Board) and upstream materials
Risk Factors
The report highlights the following potential risks:
- Global liquidity tightening exceeding expectations
- Slower-than-expected progress in AI commercialization and data center investment
- Failure of historical patterns to repeat
Source
金吾资讯Eastern