Anben Investment: Cautiously optimistic about Chinese tech stocks in the medium term; the impact of high U.S. long bond yields on Hong Kong stocks is manageable.

Chinese technology stocks have generally reported their earnings, and Anbang Investment's China equity investment manager, Chu Mingyu, stated in an interview that he remains cautiously optimistic about the sector's medium-term outlook, but expects stock performance to diverge. The AI investment theme is gradually shifting from models, computing power, and capital expenditures to commercialization and profit realization. After earnings reports, attention should be focused on: (1) whether future earnings forecasts will be upgraded; (2) whether revenue and profit growth driven by AI can support corresponding capital expenditures; (3) whether core businesses are under sustained pressure from industry competition or the macro environment. Chu Mingyu indicated that the core businesses of Chinese technology stocks are generally stable, with AI and cloud computing becoming new growth drivers. However, several leading technology firms have notably increased their AI capital expenditures, putting pressure on short-term profits and free cash flow. Therefore, the market will pay closer attention to whether these investments can be converted into actual revenue, profits, and cash returns. In terms of stock selection, he said priority should be given to platform leaders with solid core businesses, authentic AI application scenarios, clear paths to capital investment returns, and reasonable valuations. With U.S. long-term bond yields remaining high, Chu Mingyu noted that this would raise corporate financing costs and the discount rate for stock valuations, placing some pressure on global stock markets, particularly on growth stocks with high valuations and profits concentrated in the future. However, he believes the impact on Hong Kong stocks is still manageable, mainly because Hong Kong stock valuations are not high, and some leading internet and consumer stocks have already experienced substantial adjustments, reflecting certain negative factors related to interest rates and fundamentals. The market is expected to trade within a wide range going forward. He pointed out that, compared to interest rate changes, the medium-term performance of Hong Kong stocks will rely more on improvements in fundamentals and profit growth, with stock performance further diverging. If supportive macro policies from the mainland are ramped up and gradually prove effective, alongside improvements in consumption and corporate earnings, while AI investments begin to actual profit returns, there remains room for further recovery in Hong Kong stocks.