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 not high, though local micro-structural issues still need time to digest. The firm expects the sector to strengthen subsequently. It forecasts that by 2027, China's AI development will have an 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, as well as hardware and materials in tight supply with rising bargaining power, such as communication equipment, PCBs, and upstream materials. Risks include a global liquidity tightening exceeding expectations, slower-than-expected AI commercialization and data center investment, and historical patterns becoming invalid.
Source report
Guotai Haitong Securities has assessed that the risk of a bubble in China's technology sector remains low. While certain microstructural issues may take time to resolve, the sector is expected to strengthen further.
According to the research, China's AI development by 2027 possesses independent narrative drivers and favorable financial conditions. The firm is optimistic about domestic supply chains and critical hardware material segments facing supply constraints.
Investment Recommendations
The institution advises maintaining a diversified allocation while continuing to favor the tech sector driven by AI development. Key focus areas include:
- Domestic computing power chains benefiting from:
- Enhanced domestic AI capabilities
- Policy-driven support
- Recommended sectors:
- Domestic chips / semiconductor equipment and materials
- Hardware and materials with rising bargaining power, including:
- Communication equipment
- PCB (Printed Circuit Board) and upstream materials
Risk Factors
- Global liquidity tightening exceeding expectations
- AI commercialization and data center investment progress falling short of projections
- Historical patterns becoming invalid
Source
金吾资讯Eastern