"The Seven Sisters" Giving Way to "Ten Giants"? A New Narrative of Chinese Assets Revaluation is Unfolding

After the "Seven Sisters" in the US stock market, the "Eleven Knights" in the European stock market, and the "Seven Samurai" in the Japanese stock market, a new "label" is emerging in the global capital market - the Chinese "Seven Giants" or even "Ten Giants". Behind this, the new Chinese technology giants led by DeepSeek are rising strongly, with giants like Alibaba actively investing in AI. Overseas institutions such as Morgan Stanley, JPMorgan Chase, and Goldman Sachs are beginning to be bullish on Chinese assets. This week, Hong Kong stocks Alibaba, Semiconductor Manufacturing International Corporation, Tencent, BYD Company Limited, etc., all hit historical/highs or new highs in the range. The Hang Seng TECH Index also hit a new high in over two years, with a cumulative increase of about 30% since the beginning of the year, leading the performance of global capital market indices. In a report on Wednesday, Morgan Stanley analysts led by Laura Wang stated that they are turning bullish on the Chinese stock market. They believe that the Chinese stock market (especially the offshore market) has undergone a structural change and, with the support of technological breakthroughs, the upward trend in the Chinese stock market will be more sustainable. Looking ahead, the A-share market has a wider range of choices in technology stocks, and foreign ownership is at a historical low, providing potential upside for the market. In the short term, due to the advantages in technology and shareholder returns, the offshore market is expected to perform better. Alibaba: From e-commerce to AI Among the "Ten Giants" or "Seven Giants", Alibaba is undoubtedly the most prominent company at the moment. This giant has further fueled global enthusiasm for the Chinese market with its financial reports and conference calls. In previous Alibaba conference calls, questions mostly revolved around the company's e-commerce business data. However, in the latest call, AI has taken center stage, with e-commerce fundamental data only playing a supporting role: questions like how capital expenditures will be, where funds will be invested? These are the questions analysts are concerned about. The focus on Alibaba from the outside world has shifted from e-commerce to AI, attempting to gain insight into the industry's direction from the various data provided by the company. "In the next three years, the group's expected investment in cloud and AI infrastructure will surpass the total of the past 10 years", "Increase investment in three major AI areas", "The primary goal of the AI strategy is to achieve AGI"... In the conference call, Alibaba CEO Wu Yongming also explained the group's AI vision through a long discourse. On the 21st, Wall Street collectively significantly raised Alibaba's US/Hong Kong stock targets, with J.P. Morgan raising it from $125 to $170; Citigroup from $138 to $170; Goldman Sachs raised its target to $160 and $156 Hong Kong dollars; HSBC raised its target from $125 Hong Kong dollars to $156 Hong Kong dollars. A Huaxin Securities report on February 21st pointed out that before the outbreak of this round of market boom, China's core technology assets have long faced the difficulty of systematic undervaluation. For example, Alibaba's valuation has long hovered in the range below 20 times PE, far from the valuation level of the US technology sector. The enterprise pricing almost covers the e-commerce business, while AI and cloud computing, these core assets, are being ignored. With Deepseek igniting the technology investment frenzy, Hong Kong stocks have become the main battlefield for the revaluation of Chinese technology assets. "Seven Sisters" giving way to "Ten Giants" So, with AI becoming Alibaba's NEW FOCUS AUTO, and Hong Kong stocks becoming the main battlefield for the revaluation of Chinese technology assets, can the Chinese "Ten Giants" become the new protagonists in the global market? "At present, almost all markets globally are approaching their peaks, but China is close to its low point, so investing in China is definitely the best choice for contrarian investing... China is in the early stages of a new bull market." Legendary investor Anthony Bolton, known as the "European Stock God" and "Contrarian Investment Master", made this judgment in a recent interview, saying, "The US market is close to its peak, and cryptocurrencies are a symbol of 'over-speculation', which may signal the end of the bull market. In the next 10-20 years, the East may lead the global market, not the West." Jeff Weniger, securities strategy chief at WisdomTree Investments, pointed out that some circles believe China can take the lead in the field of AI. China's "Ten Giants" are competing with the "Magnificent Seven" in technology, such as BYD Company Limited and Geely challenging Tesla, Alibaba and JD.com challenging Amazon. In fact, a few days ago, Weniger's chart "China's 'Ten Giants' beating the US stock 'Seven Sisters'" was already viral everywhere. He listed Alibaba, Tencent, Meituan, Xiaomi, BYD Company Limited, JD.com, NetEase, Baidu, Geely, and Semiconductor Manufacturing International Corporation as these "Ten Giants", stating bluntly, "'Seven Sisters' are giving way to China's 'Ten Giants'. Over the past few months, Silicon Valley giants have shown mediocre performance, but Chinese stocks have continued to rise. I call them the 'Ten Giants', and what the future holds, we shall wait and see." Haitong said on February 18th that the Chinese technology "Seven Sisters" are waiting to "come out". At a macro level, our country has a solid foundation for developing technology in terms of technology, manpower, and policy support; at the stock market level, current Chinese technology companies have favorable conditions in terms of policy, funds, and market environment, and the market is currently in the process of changing from bear to bull, with the industry trend in technology potentially becoming the main theme. In the Chinese stock market, areas such as AI applications, semiconductor manufacturing, and high-end equipment are expected to produce a group of technology "Seven Sisters". A report from Huatai on February 14th stated that technology "Seven Sisters" represented by companies like Apple, Google, Amazon, Microsoft, Meta, Tesla, and Nvidia have become the core assets of technology stocks in the US stock market due to their steady growth performance and innovation capabilities. Since the launch of DeepSeek, funds have been pouring into the Hong Kong market at an accelerated pace, investing...People are paying attention to which Chinese companies will grow into the analog of the "seven sisters" of the U.S. stock market. Based on the views of the technology and automotive teams, they believe that Xiaomi, Lenovo, BYD Company Limited, Semiconductor Manufacturing International Corporation, Alibaba, Tencent, and Meituan are the core technology assets of China.Gold and silver "long" Of course, this time on Wall Street, the "bullish" sentiment is not just limited to verbal statements. The increase in holdings and inflow of gold and silver also confirms their optimistic expectations for the Chinese market. Eva Lee, from UBS Global Wealth Management, pointed out that international bullish investors are returning to China. According to the latest International Capital Flow Report released by the Institute of International Finance (IIF) on Tuesday, foreign investors actively positioned themselves in Chinese assets in January, with the net capital inflow into Chinese stocks and bonds exceeding 10 billion US dollars. This is the first time since August last year that foreign capital has simultaneously increased its holdings in Chinese stocks and bonds. Recently, news emerged that Ryan Cohen, CEO of GameStop and known as the "king of memes", has increased his personal holding of Alibaba stock to 1 billion US dollars, equivalent to about 7 million shares. His significant bet on Alibaba reflects Cohen's optimism for China's long-term economic growth prospects. David Tepper, a hedge fund giant and billionaire investor, submitted a 13-F filing to the US SEC on February 10. The filing shows that in the fourth quarter of 2024, AppaloosaLP, under Tepper, significantly increased its holdings in Chinese concept stocks and Chinese stock ETFs. From the US "Four Horsemen", FAANG, "Seven Sisters" to the current Chinese "Ten Giants", behind the changing narrative labels in the global stock market, the focus of the capital market is shifting from the US to China. With DeepSeek making a debut and launching the "Eastern nuclear bomb," global investors may reconsider whether the power map of technology will be reshaped in the AI era. As Chinese technology companies begin to gain recognition in the global innovation landscape and technological innovation turns into business growth, this journey of value discovery, starting from asset revaluation, may be opening up new narrative spaces. This article was reprinted from "CaiLiShe" and edited by GMTEight: Liu Jiayin.